Redfin is offering a different view of the supply shortage with news that the amount of homes exchanged in the first half of the year is at its lowest level in a decade. Per new numbers out from the company, Redfin found that just 1 percent—or 14 out of every 1,000 home—have been sold so far this year.
That means prospective homebuyers have 28 percent fewer homes to choose from than they did before the pandemic upended the U.S. housing market.
For comparison sake, for the first half of 2019 (pre-pandemic), the rate was 19 out of every 1,000 homes. Redfin notes that the pre-pandemic turnover rate noted above is fairly typical for the modern housing market, but a more active market would have a rate closer to 40 or 50 of every 1,000.
“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 percent more than before the pandemic,” said Redfin Deputy Chief Economist Taylor Marr. “Mortgage rates dropping closer to 5 percent would make the biggest dent in the affordability crisis by freeing up some inventory and bringing monthly payments down. 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.”
The turnover rate has dropped for every size home in every type of neighborhood over the last four years. The turnover rate of large single-family suburban homes has shrunk most because of how popular those properties were during the pandemic. Smaller houses in the city have the lowest turnover rate of all the home types in this analysis.
Northern California has the lowest turnover rate in the U.S., with just six of every 1,000 homes in San Jose changing hands in the first half of 2023—the lowest rate of the 50 most populous U.S. metros. It’s followed closely by Oakland, San Diego, Los Angeles, Sacramento and Anaheim, all places where about eight of every 1,000 homes turned over to a new owner.