By Kerry Smith
SEATTLE – Roughly 14 of every 1,000 U.S. homes changed hands during the first six months of 2023. That’s down from 19 of every 1,000 during the same period of 2019 and the lowest turnover rate in at least a decade, according to a report from Redfin.
In 2018, Freddie Mac estimated that the U.S. needed about 2.5 million more homes to meet demand, mainly due to a lack of single-family home. However, remote work and investor purchases during the homebuying boom of late 2020 and 202 depleted already-low inventory levels.
The final nail in the coffin was 2022’s soaring mortgage rates – average rates nearly doubled from January to June – that handcuffed existing homeowners to their comparatively low rates.
“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. The typical home is selling for about 40% more than before the pandemic,” says Redfin Deputy Chief Economist Taylor Marr.
What could open up the market?
“Mortgage rates dropping closer to 5% would make the biggest dent in the affordability crisis by freeing up some inventory and bringing monthly payments down,” says Marr. “But there are a few other things that would boost turnover and help make homes more affordable. Building more housing is imperative, and federal and local governments can help by reforming zoning and making the building process easier. Financial incentives, like reducing transfer taxes for home sellers and subsidizing major moves with tax breaks, would also add to supply.”
Large suburban homes have seen the biggest drop in availability. Just about 16 of every 1,000 four-bedroom-plus suburban single-family homes (1.6%) sold in the first half of 2023, down from 24 of every 1,000 that sold in the same period in 2019 (2.4%).
Other study findings
- The turnover rate dropped for every size home in every type of neighborhood over the last four years (though buyers will have an easier time finding something for sale in certain metro areas).
- The turnover rate of condos and townhomes didn’t shrink as much as single-family homes during the pandemic.
- Modestly sized single-family homes in the city are hardest to find: Just 11 of every 1,000 two- and three-bedroom urban houses sold in the first half of this year
- Smaller houses in the city have the lowest turnover rate of all home types. Roughly 11 of every 1,000 two- and three-bedroom single-family homes in urban neighborhoods sold in the first six months of 2023, compared to 14 of every 1,000 during the same period in 2019.
- Two- to three-bedroom homes in suburban neighborhoods are essentially tied with their urban counterparts for the lowest turnover rate, with 11 of every 1,000 changing hands this year. That’s down from 16 of every 1,000 in 2019.
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