Only 25 out of every 1,000 homes, or 2.5%, changed hands in the first eight months of 2024, the lowest turnover rate in the past 30 years, according to a new data report from Redfin (NASDAQ: RDFN).
The new data analysis determined that existing home sales were similar in the early-mid 1990s, but at that time the number of homes that existed was much smaller and the turnover rate was higher. For 2024 to date, there were 37.5% fewer homes sold than during the middle of the pandemic buying frenzy in 2021 (40 of every 1,000) and 31% fewer homes sold than during the last pre-pandemic year in 2019 (36 of every 1,000).
Redfin attributed the puny sales data to elevated mortgage rates, historically high home prices and a low housing inventory, adding that many buyers and sellers are staying away from real estate transactions out of economic and political uncertainty.
“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. Of the homes listed this year, many have gone stale because of the lack of demand – especially homes which needed a little extra work,” said Redfin Senior Economist Elijah de la Campa. “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.”
In a separate data report, Redfin found that while starter home prices were up 4.2% year-over-year, homebuyers need to earn $76,995 per year to afford the median priced starter home ($250,000), down 0.4% year-over-year – the first annual decline since August 2020.
“It’s great news that starter homes are becoming a little more affordable, but there’s a catch,” said de la Campa. “Starter homes aren’t what they used to be. A decade ago, a turnkey four-bedroom house in a nice neighborhood was often considered a starter home, but today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”
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