FOX Business' Katrina Campins talks about the growing demand for mortgage refinancing, who will benefit, and the impact on the real estate and housing sector.
The U.S. housing market remains stagnant, with only 25 out of every 1,000 homes expected to be replaced by 2024, according to recent data from real estate firm Redfin.
According to Redfin, turnover in the first eight months of this year was the lowest in at least 30 years. Redfin conducted an analysis of residential turnover rates comparing the first eight months of 2024 across different metro areas, homes, and neighborhood types. The company uses sales figures as a way to measure housing availability.
By comparison, homes sold this year are down 37% compared to the height of the buying frenzy caused by the COVID-19 pandemic. In 2021, 40 out of 1,000 households relocated. Homes sold were down 31% compared to 2019, according to Redfin data.
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Economists at Redfin say rising mortgage rates and record home prices, with enough demand to keep prices up, are driving potential buyers and sellers away, creating this low volume.
Although inventory is up compared to a year ago, there are still far fewer homes for sale than pre-pandemic levels, the company said.
A for sale sign is posted outside a home for sale on August 16, 2024 in Los Angeles, California. (Photo by Patrick T. Fallon/AFP) (Photo by Patrick T. Fallon/AFP via Getty Images)/Getty Images)
In addition, many buyers and sellers are holding back from selling due to economic and political uncertainty. Redfin said they are taking a “wait-and-see” attitude amid debate over the possibility of a recession and a competitive presidential race between two candidates with contrasting economic and housing policies. That's what it means.
According to Redfin, turnover rates have declined for all property types in all regions over the past year, but condos and townhouses have seen the largest declines.
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Scott Harris, an associate broker on the Harris Residential team, told FOX Business that the market remains “stalled,” given that “it will take time for the market to return to a healthy state” for both buyers and sellers. “I'm doing it,” he said.
“For Sale” sign on a home in Philadelphia, Pennsylvania on August 16, 2024. (Joe Lamberti/Bloomberg via Getty Images/Getty Images)
The good news for buyers is that lower mortgage rates are “making buyers very keen,” Harris said.
But sellers, especially those looking to buy now, face a much different situation, with more than 60% of mortgage balances below 4%, Harris said.
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Sellers feared losing their locked-in low interest rates and were “afraid of upgrading or downsizing to an environment where mortgages exceed 7%.”
But interest rates are gradually coming down and the market is finally returning to “an environment where sellers are starting to get interested again,” Harris said.
