U.S. Home Turnover Rate Hits Lowest Point in 30 Years

The U.S. home turnover rate has reached its lowest level in nearly three decades, reflecting a significant slowdown in the housing market. Between January and September 2023, only about 28 out of every 1,000 homes changed hands, marking a downturn in residential mobility not seen since at least the 1990s. This analysis, conducted by Redfin, highlights a concerning trend where homeowners are remaining in their properties longer.

The home turnover rate, calculated by dividing the number of homes sold by the total number of existing sellable properties, provides insight into homeowner behavior. The current rate indicates a 30% decline from the average turnover rate during the same period from 2012 to 2022. Traditionally, factors such as job relocations or the need for larger living spaces have motivated homeowners to sell. The current stagnation suggests a lack of opportunities for employment mobility or affordability issues related to current housing prices and mortgage rates.

Job Market Concerns Affecting Home Sales

Daryl Fairweather, Chief Economist at Redfin, emphasized the implications of this trend, stating, “If people are stuck, it’s reflective of how the economy is stuck.” The broader economic environment is not conducive to residential sales, particularly as U.S. employers added only 22,000 jobs in August 2023. This figure was significantly lower than the expected 80,000 and dropped from 79,000 in July. The Labor Department’s hiring data for September was not available due to a government shutdown, but a survey by payroll company ADP indicated a loss of 32,000 private sector jobs that month.

Amidst the concerns over the job market, several major companies—including Microsoft, General Motors, Amazon, and Target—have announced job cuts. This uncertain job landscape is likely contributing to the declining home sales, as potential sellers weigh their options cautiously.

High Mortgage Rates Keep Homeowners from Moving

Another significant factor stalling home sales is the reluctance of homeowners who secured low mortgage rates during the 2020-2021 period. Many have little incentive to sell and buy at today’s higher rates, which have seen increases since the housing market began its slump in 2022. The market is still recovering from a frenzy of homebuying driven by historically low mortgage rates, which have subsequently risen.

Sales of previously occupied homes in the U.S. reached their lowest level in nearly 30 years last year, and while there has been a slight acceleration in sales this year, the overall activity remains sluggish. Recently, the average rate on a 30-year mortgage fell to its lowest level in over a year, which could potentially enhance purchasing power for buyers. Nevertheless, many Americans are still unable to afford homes following years of price increases, with the median sales price of previously occupied homes rising by 53% over the past six years.

The current housing market dynamics present a complex challenge for potential buyers and sellers alike. With economic uncertainties and high mortgage rates persisting, the outlook for home sales remains cautious as homeowners continue to stay put.