Redfin Says Home Turnover Rate Is The Lowest In 30 Years, Here Are Cities Where Homes are Moving Fast

We all know the housing market has had a slow year, but the latest report from Redfin reflects the glacial pace of sales. Redfin found that only 25 out of every 1,000 homes were transacted during the first eight months of 2024. This is down 37.5% from the middle of the pandemic market high, when 40 out of every 1,000 homes were sold and 31% from 2019. 

Redfin analyzed data from 2012-2024. The existing home sales rate was similar to the early to mid-1990s, but there was a smaller pool of homes and a lower population. The culprit for the slow rate of sales is the combination of higher mortgage rates combined with high prices. 

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Many homeowners are unwilling to sell because they fear a higher mortgage rate. While rates are dropping, they are still nowhere near where they were a few years ago. Most people with a mortgage have a lower rate than today’s level. Redfin reported that three-quarters of mortgaged U.S. homeowners have secured a rate under 5%.

Because of the low supply of existing homes, the median home price has skyrocketed to $416,700, according to the latest data from the National Association of Realtors. While more homes are on the market in parts of Florida and Texas, the inventory is below historical levels. Sellers may also be waiting until after the Presidential election to make a move.

"Mortgage rates have already fallen more than one percentage point from their 2024 peak, but we have not yet seen a significant increase in the number of homes changing hands," said Redfin Senior Economist Elijah de la Campa. 

While inventory is rising, new listings aren’t. The rate of homes listed for sale is at the lowest level since 2012, with 32 out of every 1,000 homes. This means that the homes on the market may not be the ones buyers want to see. De la Campa also noted that much of the inventory on the market may be in need of repairs. Many buyers are drawn to new construction or fully renovated homes in like-new condition. Potential buyers may simply not be finding what they need on the market. While existing homes have been slow to move, new home sales are up nearly 10% year over year. 

In September, Redfin CEO Glenn Kelman told Yahoo Finance that he had never seen buyers respond so slowly to mortgage rate drops. "Over the past ten years, every time rates have gone down, sales have gone up, but this time rates went down a month ago and demand was fairly sluggish." 

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Meet The Market Movers

The national data doesn’t always tell the full story. There are a few markets where homes are moving briskly. Redfin found that in Phoenix, 38 out of every 1,000 homes sold. Phoenix has a median list price of $450,000, up around 2.3% year over year. In Newark, NJ, 37 of every 1,000 homes were up for sale even though home prices are up by nearly 19%. Two other top cities saw prices falling slightly. The median sales price was down 1% to $455,000 in Nashville and 36 out of every 1,000 homes were sold. In Tampa, where 35 out of every 1,000 homes were sold, prices were down 3.3% year over year. 

Where homes aren't transacting is in the Golden State. California had seven out of the top ten markets with low turnover. Los Angeles led the way with just 25 out of 1,000 homes sold. With the median price over $1 million, the city may be too pricey for many potential buyers. Redfin attributed part of California's slow sales pace to the impact of Proposition 13, which rewards long-term homeownership by capping property tax growth. 

Potential buyers hoping mortgage rates will fall may not want to get too excited. Industry watchers, including Chen Zhao, Redfin's lead economic analyst, feel that rates may not fall below 5.7% this year. Rate decreases have boosted refinancing, but purchases have been slower to move. Kelman said that to have a real boom, rates would have to come down to the low 5%s so that people "who got a 3% or 4% mortgage see some upside in moving up right now."

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