Number U.S. Home Sales decline to 30-Year Low in 2024 Amid High Mortgage Rates and Economic Uncertainty

In a recent analysis by Redfin, the U.S. housing market has reached its lowest turnover rate in over three decades. According to the report, only 25 out of every 1,000 homes were sold in the first eight months of 2024, marking the lowest turnover since at least the early 1990s. This figure reflects a significant drop from 2021's pandemic-fueled surge, where 40 homes per 1,000 changed hands, and even a decline from the pre-pandemic year of 2019, which saw 36 out of every 1,000 homes sold.

The reasons behind this sharp decline are complex, driven by a mix of high mortgage rates, rising home prices, and economic uncertainty. Over 75% of U.S. homeowners currently hold mortgages with interest rates below 5%, creating a "lock-in effect" that discourages them from selling, as purchasing a new home would likely result in much higher borrowing costs. While mortgage rates did dip into the low 6% range by August 2024, this reduction has not been enough to boost home sales significantly.

In addition to high rates, home prices have also reached record levels, supported by steady demand but hindered by a limited supply of available homes. Although inventory has increased slightly compared to last year, it remains far below pre-pandemic levels, further constraining the market.

Economic uncertainty, especially concerns about a potential recession and the upcoming U.S. presidential election, has also caused many buyers and sellers to approach the market cautiously. Additionally, new rules surrounding real estate agent fees are adding to the overall hesitation among participants.

Redfin Senior Economist Elijah de la Campa noted that while mortgage rates have decreased from their 2024 peak, there hasn't been a significant rise in transactions. He highlighted that many homes on the market are stagnant, particularly those requiring repairs or renovations, with most homeowners still locked into low-interest mortgages. He suggested that further declines in rates might be necessary to incentivize more sales.

The number of homes listed for sale has also dropped to its lowest point since at least 2012. In the first eight months of 2024, only 32 homes out of every 1,000 were put on the market, a 30% decrease from 2019. Turnover rates for suburban and rural homes slightly outpaced urban areas, with 25 out of every 1,000 homes in suburban and rural regions sold in 2024, compared to 24 per 1,000 in urban areas. Since 2019, turnover rates have fallen by nearly a third for both single-family homes and condos/townhouses in these areas.

Some U.S. cities, especially those in the Sun Belt and metro areas near New York City, have seen relatively higher turnover rates. Phoenix led the nation with 38 homes sold per 1,000, followed closely by Newark, NJ (37), Nashville, TN (36), and Tampa, FL (35). These cities benefited from a combination of affordable housing and the rise of remote work, which allowed more people to move away from higher-cost urban centers.

In contrast, California metro areas, particularly Los Angeles, saw some of the lowest turnover rates. Los Angeles had only 15 out of every 1,000 homes change hands, a trend attributed to the state's property tax laws, which incentivize homeowners to remain in their homes long-term. However, despite the overall slowdown in California, the Bay Area saw a slight increase in home sales compared to 2023, with San Jose, San Francisco, and Oakland showing modest gains.

Among the cities experiencing the steepest drop in sales was Austin, TX, where the turnover rate fell by 49% from 2019, dropping from 59 homes per 1,000 to just 30 in 2024. This highlights the broader trend of significantly reduced activity in many major housing markets across the U.S.