U.S. Home Turnover Hits 30-Year Low as Mortgage Rates Freeze Market

Photo bySarah Wolak

The U.S. housing market is experiencing its lowest home turnover rate in over three decades, with only 25 out of every 1,000 homes changing hands during the first eight months of 2024. This 2.5% turnover rate marks a historic dip, driven by elevated mortgage rates, rising home prices, and economic uncertainty, according to a new report from real estate brokerage Redfin.

The analysis, which examined housing turnover across various metro areas, home types, and neighborhoods, revealed a significant drop in transactions compared to previous years. Redfin noted that the current turnover rate is the lowest recorded since at least 1994. Although existing home sales were slow in the 1990s, the number of homes on the market was significantly smaller, making today’s low turnover even more striking.

The contrast is stark when comparing today’s market with recent years. In 2021, at the height of the pandemic buying frenzy, 40 of every 1,000 homes changed hands — a rate 37.5% higher than in 2024. Even in 2019, the last pre-pandemic year, the turnover rate was 36 out of 1,000, 31% higher than today’s figures.

Why Homes Aren't Changing Hands

The sluggish turnover is largely due to historically high mortgage rates, which are keeping many homeowners locked into their existing homes. Over three-quarters of U.S. homeowners with a mortgage are sitting on rates below 5%, a significant deterrent for those considering selling. Although mortgage rates dipped to the low 6% range in August, the reduction has not yet led to a noticeable increase in sales activity.

Rising home prices and low inventory are also contributing to the gridlock. Home prices have surged to record highs this year, bolstered by limited supply and steady demand. But the number of homes listed for sale has plummeted, hitting its lowest point since at least 2012. Only 32 out of every 1,000 homes were listed in the first eight months of 2024, a 30% decline from 2019 and 29% below the levels seen during the pandemic surge.

Elijah de la Campa, Senior Economist at Redfin, noted that the drop in mortgage rates hasn't been enough to spur significant movement in the market. “Of the homes listed this year, many have gone stale because of the lack of demand — especially homes which needed a little extra work,” de la Campa explained. “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.”

Turnover Rates Vary by Region and Home Type

Despite the nationwide slowdown, some areas are seeing slightly higher turnover rates. Homes in suburban and rural areas are changing hands at a slightly faster rate than those in urban areas, with 25 out of every 1,000 single-family homes and condos/townhouses sold in the suburbs and rural regions, compared to roughly 24 out of every 1,000 in urban locales.

Since 2019, the turnover rate for single-family homes in suburban and rural areas has fallen by 32.9%, while condos and townhouses in these areas saw a 37.6% drop. In urban areas, single-family homes experienced a 25.8% decline in turnover, while condos and townhouses dropped by 35.2%.

Sun Belt cities and metro areas near New York recorded the highest turnover rates among the nation’s 50 largest metros. Phoenix led the pack, with 38 out of every 1,000 homes changing hands, followed closely by Newark, N.J. (37), Nashville, Tenn. (36), and Tampa, Fla. (35).

As mortgage rates remain elevated and inventory tight, the U.S. housing market may continue to struggle with low turnover rates, leaving many prospective buyers and sellers in a standstill.