Housing market stuck in biggest freeze in a decade

Only 14 of every 1,000 homes turned over in first half 2023: Redfin

(Photo Illustration by The Real Deal with Getty)
(Photo Illustration by The Real Deal with Getty)

Those looking for new neighbors will be disappointed to learn that the housing market is in its deepest freeze in a decade.

In the first half of the year, only 14 out of every 1,000 homes in the country were sold, according to a report from Redfin. That’s equivalent to about 1 percent of the nation’s housing stock, the lowest turnover rate in at least a decade.

In the same period prior to the pandemic, 19 out of every 1,000 homes changed hands.

The report named frequently cited roadblocks, like pandemic-era low mortgage rates and remote work that kept inventory levels low. Mortgage rates have surged in the last year, sidelining buyers who can’t afford the rates and sellers who don’t want to sacrifice the rate they obtained at a more favorable time.

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Mortgage rates would have to drop closer to 5 percent to free up some inventory, Redfin deputy chief economist Taylor Marr said. Other ideas to raise inventory and create a more robust market include increased home construction, zoning reforms and tax incentives for buyers and sellers.

Large suburban homes have taken the biggest hit in terms of turnover rate since the pandemic. Roughly 16 of every 1,000 four-bedroom suburban homes sold in the first half of the year, versus 24 of every 1,000 in the first half of 2019. That being said, the turnover rate has fallen in the past four years for every home size in every type of neighborhood.

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Turnover and inventory are weakest in Northern California and the Bay Area. Of the 50 most populous metros in the country, San Jose sported the lowest turnover rate with six of every 1,000 homes sold in the first half. The rates in Oakland, San Diego, Los Angeles, Sacramento and Anaheim weren’t much better, all seeing the turnover rate drop by at least 30 percent in the last four years.

Newark, New Jersey, had the highest turnover rate of the largest metros in the first half: 24 of every 1,000 homes sold. Nashville had the second highest turnover rate, followed by Austin, Texas.