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Just 1.4 percent of homes in the United States have changed hands this year — the lowest rate in a decade, according to a new analysis released Tuesday by Redfin.
Approximately 14 in every 1,000 homes changed hands in the first six months of 2023, down from 19 of every 1,000 over the same period in 2019, according to the data.
“The quick increase in mortgage rates created an uphill battle for many Americans who want to buy a home by locking up inventory and making the homes that do hit the market too expensive,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “The typical home is selling for about 40 percent more than before the pandemic.”
The historically low number of transactions illustrates the impact of 2022’s soaring mortgage rates, combined with the homebuying boom of late 2020 and 2021 that further depleted an already nearly-barren supply of housing.
In 2018, prior to the pandemic-induced buying frenzy, Freddie Mac estimated that about 2.5 million more homes needed to be built to meet demand, with a shortfall mainly due to a lack of construction of single-family homes.
Today, the only viable paths for would-be homebuyers to draw relief is for mortgage rates to drop closer to 5 percent (they currently sit closer to 7 percent) and for significantly more housing to be built.
“Building more housing is imperative, and federal and local governments can help by reforming zoning and making the building process easier,” Marr said. “Financial incentives, like reducing transfer taxes for home sellers and subsidizing major moves with tax breaks, would also add to supply.”
According to the Redfin report, the turnover rate has shrunk the most in the suburbs as house hunters there have seen their options shrink dramatically. 16 of every 1,000 suburban homes changing hands during 2023, two-thirds the amount seen in 2019 according to Redfin — meaning buyers looking for suburban homes have 33 percent fewer homes to choose from.
“New listings normally hit the market on Thursdays, and I have buyers who are excitedly checking their Redfin app Thursday mornings, only to find nothing new,” Phoenix Redfin agent Heather Mahmood-Corley said. “That goes for buyers in every price range in every type of neighborhood, but what people want most are those move-in ready, mid-sized homes in neighborhoods with highly rated schools. Those are hardest to find because for people to buy one, someone needs to sell one. That’s not happening, because so many of those homeowners have low mortgage rates.”
Modestly-sized single-family homes in urban centers have become the hardest to find, with just 11 of every 1,000 two and three-bedroom urban houses changing hands in the first half of this year. The urban area with the lowest turnover rate is in the Bay Area, including San Jose, where just six of every 1,000 homes changed hands during the first half of 2023, the lowest of the 50 most populous United States cities.
San Jose was followed closely by a slew of cities in California — Oakland, San Diego, Los Angeles, Sacramento, and Anaheim — all of which have seen their turnover rates fall by 30 percent since 2019.
