The housing market is seeing its lowest turnover rate in decades — a sign that mortgage rates and home prices may still be too high to convince buyers to get off the sidelines, according to a new report from Redfin.
The real-estate-listings site found that just 2.5% of all US homes swapped hands in 2024 through the end of August. That's the lowest turnover rate for any first-eight-month period in at least 30 years, the firm said, comparing the current housing environment to the early- to mid-90s.
In that era, home sales were at similar levels, though the total supply of homes was larger, which drove a higher turnover rate, the report added.
Homes have changed hands at the slowest past so far this year in Los Angeles, with just 15.2 sales recorded for every 1,000 homes in the city. Boston and San Francisco follow, with 15.6 and 16.6 sales recorded for every 1,000 homes, respectively.
The share of homes being listed for sale has also slumped to its lowest level in over a decade. 32 out of every 1,000 homes in the US were listed in the first eight months of the year, the lowest tally for the period since at least 2012, the analysis added.
Buyers are still hesitant to dip into the market, likely due to still-high mortgage rates and home prices, as well as uncertainty in the economic and political environment, the firm said.
"Mortgage rates have already fallen more than one percentage point from their 2024 peak, but we have not seen a significant increase in the number of homes changing hands. Of the homes listed this year, many of gone stale because of the last of demand," Elijah de la Campa, a Redfin senior economist, said in a note. "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."
Mortgage rates have slid lower in recent months, but remain above well-above their pandemic-era norms. The 30-year fixed rate hovered around 6.08% the last week, according to Freddie Mac data.
With the majority of homeowners with a mortgage having a rate below 6%, that means there's still an imbalance of supply and demand on the market — a factor that pushed home prices in the US to another fresh record in July.
Most housing economists expect mortgage rates to tread slightly, but not dramatically, lower in the coming months. Previously, Redfin estimated that the 30-year fixed rate would end 2024 above 6%. Homes sales, meanwhile, could notch 4.3 million by the end of the year, a 5% boost from last year's levels, it added.
