Home Turnover Hits 30-Year Low: What It Means for You

 

 

A recent report from Redfin reveals a significant trend in the U.S. housing market: the home turnover rate has plummeted to its lowest level in at least 30 years. In the first eight months of 2024, only 25 out of every 1,000 homes changed hands, translating to just 2.5% of all U.S. homes being sold during this period. This marks a stark decline compared to previous years, particularly during the pandemic buying frenzy of 2021 when 40 out of every 1,000 homes were sold.

Historical Context and Current Trends

Redfin's analysis, which draws on data from 2012 to 2024, indicates that while home sales in the early to mid-1990s were comparable, the total number of homes available was significantly lower at that time, resulting in a higher turnover rate. The current turnover rate reflects a 37.5% decrease in home sales compared to 2021 and a 31% decrease from the last pre-pandemic year in 2019.

 

Factors Influencing Low Turnover Rates

Several interconnected factors contribute to this historically low turnover:

• High Mortgage Rates: Although mortgage rates have fallen more than one percentage point from their peak earlier this year, they remain elevated compared to historical norms. Many homeowners are locked into lower rates secured in previous years, making them hesitant to sell and potentially face higher rates again.
• Stagnant Demand: The previous lack of demand has led many homes listed for sale to become "stale," particularly those requiring renovations. Redfin Senior Economist Elijah de la Campa noted that consistent declines in mortgage rates are necessary for many homeowners to feel comfortable moving on from their advantageous deals.
• Inventory Shortages: The number of homes available for sale has dropped to its lowest level in over a decade, with only 32 out of every 1,000 homes listed for sale in the first eight months of 2024. This represents a 30% decline from pre-pandemic levels.

 

Regional Insights

The report also highlights regional variations in home turnover rates across the U.S.:

• Highest Turnover Rates: Phoenix leads with the highest turnover rate at 38 out of every 1,000 homes, followed by Newark (37) and Nashville (36).
• Lowest Turnover Rates: In contrast, Los Angeles recorded the lowest turnover rate at just 15 out of every 1,000 homes, largely due to California's Proposition 13 tax laws that discourage homeowners from selling.
• Comparative Declines: The decline in turnover is not uniform across property types or regions. For instance, suburban and rural areas have seen a 32.9% drop in single-family home sales since 2019, while condos and townhouses have experienced a 37.6% decrease.

Conclusion

The current housing market is characterized by unprecedented low turnover rates, driven by high mortgage rates which are continuously declining, stagnant demand which recently has started to increase, and historical inventory shortages. As homeowners remain locked into favorable mortgage terms, the dynamics of buying and selling homes are shifting significantly. For potential buyers and sellers navigating this landscape, understanding these trends is crucial for making informed decisions.As we move forward into the latter part of 2024, it will be essential to monitor how these factors evolve and what impact they may have on housing availability and market activity. As it stands now, the increase in demand attributed to declining mortgage rates and the lack of inventory are causing homes listed for sale to increase its price.

 

Ready to Make Your Move?

Whether you're looking to buy your dream home or sell your current property, our team at Mike Home Sweet Homes is here to help you navigate this challenging market with confidence. Don’t miss out on this chance to secure your financial future!

 

Visit mikehomesweethomes.com to receive a professional home evaluation and take advantage of listing your home in a low inventory market with higher demand from buyers seeking a home.