Relocations and life changes typically keep the housing market active as people move from house to house.

This year, however, elevated mortgage rates, rising home prices, and economic uncertainty have slowed that turnover significantly, especially in California’s metro areas.

A September analysis from Redfin shows the U.S. home turnover rate—which indicates how often homes are sold in a given area—has hit a 30-year low, with only 25 of every 1,000 homes changing hands in the first eight months of 2024.

“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,” Redfin Senior Economist Elijah de la Campa said in the report.

De la Campa said many homes listed this year have gone stale due to low demand, particularly those requiring some additional work.

According to Redfin, current home sales resemble levels seen in the early to mid-1990s, but since there was a much smaller housing stock at that time, turnover rates were higher.

“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,” de la Campa said.

The market has also slowed significantly compared with the pandemic buying surge, with 37.5 percent fewer homes sold this year than in the comparable period of 2021 and 31 percent fewer than in 2019, the last before the pandemic.

According to the report, turnover rates have dropped across all property types nationwide over the past year, with condos and townhouses experiencing the largest declines. This drop is attributed to a nationwide increase in condo inventory, while sales have slowed due to rising HOA fees and insurance costs.

Additionally, homes in suburban and rural areas tend to change hands slightly more frequently than those in urban areas.

Redfin also reports that the rate of homes listed for sale dropped in the first eight months of the year, reaching its lowest level since at least 2012—the earliest year for which listing data is available. This rate, 32 out of every 1,000 homes, is down 30 percent from pre-pandemic levels in 2019 and down 29 percent from the pandemic buying surge in 2021.

Lowest Rates

Seven of the 10 U.S. metro areas with the lowest turnover rates are in California, the report shows, the worst being Los Angeles, where only 15 of every 1,000 homes were sold. Other California cities on the list include San Francisco, Oakland, Anaheim, San Jose, Sacramento, and San Diego.

It’s no surprise that California has some of the lowest housing turnover rates in the country, largely due to long-standing tax policies, the report states.

One of them is Proposition 13, passed in 1978, which limits annual property tax increases to 2 percent or less, regardless of how much a property’s market value rises. This creates a strong incentive for homeowners to stay in their homes rather than face much higher property taxes on a new purchase.

Additionally, California’s high housing prices can deter many would-be sellers, who might struggle to find affordable replacement homes within the state.

Also on the list are Boston; Providence, Rhode Island; and Montgomery County, Pennsylvania.

Highest Rates

Cities close to California and metro areas near New York City dominate the list of major regions with the highest turnover rates, based on an analysis of the 50 largest metro areas, the report shows.

Phoenix had the highest turnover, with 38 of every 1,000 homes changing hands. Newark, New Jersey, followed with 37 per 1,000, then Nashville at 36 per 1,000, and Tampa, Florida, with 35 per 1,000.

The rise in home sales in these areas has been fueled largely by workers searching for affordable housing options while working remotely, especially during the pandemic. Additionally, commuter metro areas such as Newark and Nassau County, New York, maintain higher turnover rates due to the appeal of suburban living within reach of New York City.

Notably, all the cities on the list have experienced a substantial drop in turnover rates since 2019, with the top three seeing declines of more than 40 percent. These same three cities also led the list in 2019, though in a slightly different order, the report states.

Reasons

Low turnover rates are driven by several interconnected factors, including rising mortgage rates, high home prices, and economic and political uncertainty.

More than three-quarters of U.S. homeowners with mortgages have rates below 5 percent, far lower than this year’s peak rate of 7.52 percent in April. This has led many to delay selling and buying new homes at higher rates. Although rates fell to the low 6 percent range in August, the decrease has yet to lead to a significant increase in sales.

U.S. home prices have reached record highs this year, driven by steady buyer demand that continues to push prices upward, the report shows. Additionally, while the number of homes for sale has increased slightly from last year, the supply is still significantly lower than it was before the pandemic, keeping the market tight and prices elevated.

Lastly, the recent election has affected the housing market, with many buyers and sellers holding off due to recession concerns and differing policies between the presidential candidates.