SEATTLE, WA — In a recent analysis, Redfin reports that just 25 out of every 1,000 U.S. homes were sold in the first eight months of 2024, marking the lowest turnover rate in decades. This trend reflects significant shifts in the housing market, influenced by a variety of economic factors.
Redfin’s extensive study draws comparisons across metro areas and neighborhood types, using data spanning from 2012 to 2024. The turnover rate, which indicates how frequently homes are sold within a given area, has reached its lowest point in at least 30 years. This decline is attributed to several intertwined factors.
Elevated mortgage rates are a primary reason for the slowdown. Over three-quarters of U.S. homeowners have secured loans with rates below 5%, while rates peaked at 7.52% in April 2024. This disparity in rates has led to a “lock-in effect,” where homeowners hesitate to sell and face higher borrowing costs. Although rates dipped to the low 6% range by August, this change has not yet stimulated a significant increase in home sales.
The market also contends with rising home prices and a limited supply. While the number of homes on the market has grown slightly from last year, it remains considerably lower than pre-pandemic levels. Economic uncertainties and political factors, such as the upcoming U.S. Presidential election, have further influenced potential buyers and sellers to adopt a cautious approach.
Regionally, some areas exhibit more activity. Phoenix leads major metros with 38 out of every 1,000 homes changing hands, followed closely by Newark, NJ, and Nashville, TN. These areas, especially in the Sun Belt, have maintained relatively strong sales due to their appeal for affordable living and remote work.
Conversely, California, known for its low housing turnover due to tax laws like Proposition 13, reports the lowest activity, with Los Angeles at the bottom of the list. Despite this, the Bay Area saw a slight increase in turnover compared to the previous year.
Overall, the U.S. housing market is experiencing a unique period of low turnover, influenced by economic constraints and shifting buyer behaviors. As mortgage rates and market conditions continue to evolve, many are watching cautiously to see how these trends will impact future home sales.
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