The U.S. housing market has seen its lowest turnover rate in decades, with only 25 out of every 1,000 homes changing hands in the first eight months of 2024. According to Redfin, this 2.5% turnover rate is the lowest in at least 30 years. The market slowdown is largely driven by elevated mortgage rates, high home prices, and ongoing economic uncertainty.
Redfin’s analysis compares 2024 to historical data, showing that the current turnover rate is 37.5% lower than the pandemic-driven peak in 2021, when 40 out of every 1,000 homes sold. It also represents a 31% drop from 2019, when 36 out of every 1,000 homes changed hands.
The key driver of this record low turnover is high mortgage rates, which reached 7.52% in April, the highest level in years. More than three-quarters of U.S. homeowners are locked into mortgage rates below 5%, incentivizing them to hold onto their properties rather than face the prospect of paying much higher rates for new loans, a phenomenon known as the "lock-in effect." Despite rates dropping to the low 6% range in August, sales activity has not rebounded significantly.
Rising home prices have also played a role in reducing turnover. U.S. home prices have consistently hit new highs this year, driven by limited supply and steady buyer demand. The number of homes on the market has slightly increased compared to 2023, but remains far below pre-pandemic levels.
Economic and political uncertainties, including concerns about a potential recession and the upcoming U.S. Presidential election, have further prompted both buyers and sellers to adopt a wait-and-see approach. Some are also delaying transactions as they assess new regulations regarding real estate agent fees.
New listings have also plummeted, with just 32 out of every 1,000 homes being listed for sale in the first eight months of 2024, a drop of 30% from 2019 levels and 29% from the 2021 surge. This marks the lowest level of home listings since at least 2012, when Redfin began tracking the data.
Some regions of the country are seeing more homes change hands than others. In the Sun Belt and metro areas near New York, turnover rates are higher than the national average. Phoenix leads the major metros with 38 out of every 1,000 homes sold, followed by Newark, NJ (37 per 1,000), Nashville, TN (36 per 1,000), and Tampa, FL (35 per 1,000).
Conversely, California metros dominate the list of areas with the lowest turnover. Los Angeles has the lowest rate, with just 15 out of every 1,000 homes selling so far this year. Other low-turnover areas include San Francisco, Oakland, and San Diego. California’s long-standing tax policies, particularly Proposition 13, which limits property tax increases, continue to incentivize homeowners to stay put.
While mortgage rates have dipped slightly from their April peak, Redfin Senior Economist Elijah de la Campa cautions that sales may remain low unless rates continue to fall. “With the majority of homeowners locked into low mortgages, rates will need to keep falling consistently for many to feel comfortable moving on from the deals they secured years ago,” said de la Campa.
As the housing market continues to contend with these challenges, it remains to be seen whether a further decline in mortgage rates or a shift in economic conditions will lead to a recovery in home sales.
