In the first half of 2023, the housing market in the United States witnessed a significant downturn in turnover. Redfin reports that only 14 out of every 1,000 U.S. homes changed hands, a drastic decline from 19 out of every 1,000 during the same period in 2019. The drop is even more pronounced for large suburban houses. Let’s dive into the details and understand what’s driving this decade’s lowest turnover rate.
Nationwide Scenario
About 14 of every 1,000 U.S. homes were sold during the initial six months of this year. This represents the lowest turnover rate in at least a decade, plunging from the previous 19 out of every 1,000 in 2019.
Redfin’s Deputy Chief Economist Taylor Marr explained the situation, stating, “The quick increase in mortgage rates has locked up inventory, making homes too expensive. Building more housing is imperative, and federal and local governments can help. Financial incentives would also add to supply.”
The reality is that people don’t want to move if they don’t have to. Why trade in a 3% mortgage rate for a 6% rate? So there are fewer homes on the market. And this is driving housing prices up. It’s all about supply and demand! See our article MarketNsight Reports First Significant 2023 Price Increase.
Suburban Shift
The largest slump was observed in the suburbs. In 2023, only 16 of every 1,000 large suburban houses changed ownership, two-thirds of the number in 2019. Prospective buyers of large four-bedroom suburban homes now have 33% fewer options.
The Pandemic Impact and the California Crunch
The pandemic had diverse effects on different types of housing. Condos and townhomes didn’t witness as much shrinkage as single-family homes. Smaller houses in cities are the toughest to find, selling at a rate of 11 out of every 1,000.
California leads the nation in low turnover, with just six of every 1,000 homes in San Jose changing hands. Other cities like Oakland, San Diego, Los Angeles, Sacramento and Anaheim follow suit.
Bright Spots – Newark and Nashville
On the bright side, Newark, NJ; Nashville, TN; and Austin, TX are outperforming, with more than 23 of every 1,000 homes being sold. Nashville and Austin also stand out for having some of the smallest declines in turnover since 2019. This is partly because of robust new construction in these metros.
The Solutions Ahead
Addressing the situation, Taylor Marr emphasized, “Mortgage rates dropping closer to 5% would make the biggest dent in the affordability crisis. Building more housing, reforming zoning, and easing the building process are vital. Reducing transfer taxes for home sellers and subsidizing major moves with tax breaks would boost turnover.”
The turnover rate for U.S. homes has hit a decade’s low, underlining the urgency to address housing affordability and supply. The situation calls for a concerted effort by all stakeholders, including governments, real estate companies, and homebuyers, to foster a more dynamic and accessible housing market.
For a comprehensive view of this report, you can visit Redfin’s detailed analysis here.