10 Housing Markets That Will Benefit From Lower Mortgage Rates the Fastest 

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Mortgage rates are finally decreasing, a huge sigh of relief for buyers who have been left on the sidelines for many months. Indeed, these rates have had an effect on housing supply, as many homebuyers feel “locked in” with lower mortgages they secured a few years back and were unwilling to sell.

Now, a new Realtor.com report found that the market is “thawing,” translating into increased supply as there is “increased seller and refinance activity.” And in some markets, this surge in activity is even more salient, according to the report. 

“Areas that saw strong buyer activity, even as mortgage rates climbed beyond 6.5%, stand to see the most benefit from falling rates,” said Realtor.com‘s economic research analyst, Hannah Jones. “Many of these areas are affordable relative to most U.S. markets, which kept buyers in the game while home sales fell elsewhere due to the combination of high mortgage rates and home prices.”

Jones added that the recent decline in mortgage rates offers these high-rate buyers the opportunity to refinance or sell and take advantage of a lower mortgage rate. 

In turn, she said, this shift could result in more homes for sale should ‘unlocked’ homeowners decide to sell. 

“These markets, more so than other U.S. markets, could see a pick-up in supply due to the relatively high share of mortgages at a rate higher than today’s rate,” added Jones. 

Here are the markets that will benefit from lower rates the fastest, according to Realtor.com.

Naples, Fla.

• Share of mortgages above 6.5%: 15.2%
• Median list price in July: $770,000

St. Louis, Mo.

• Share of mortgages above 6.5%: 13.9%
• Median list price in July: $313,900

Myrtle Beach. S.C.

• Share of mortgages above 6.5%: 13.4%
• Median list price in July: $339,900 

Cape Coral, Fla.

• Share of mortgages above 6.5%: 12.4%
• Median list price in July: $449,950

Miami, Fla.

• Share of mortgages above 6.5%: 11.7%
• Median list price in July: $535,000

Alburquerque, N.M.

• Share of mortgages above 6.5%: 11.6%
• Median list price in July: $419,000

Kansas City, Mo.

• Share of mortgages above 6.5%: 11%
• Median list price in July: $410,000

Fort Wayne, Ind.

• Share of mortgages above 6.5%: 10.5%
• Median list price in July: $319,900

Oklahoma City, Okla.

• Share of mortgages above 6.5%: 10.4%
• Median list price in July: $325,903

New Haven, Conn.

• Share of mortgages above 6.5%: 10.3%
• Median list price in July: $424,92

As of Aug. 22, the 30-year average mortgage rate stood at 6.46%, according to Freddie Mac, which noted that it expects rates to “gently slope downward through the end of the year.” In fact, Realtor.com also recently revised its year-end forecast to 6.3% from 6.5%.

Thanks to the expected Federal Reserve rate cuts next month, Moody’s Analytics chief economist Mark Zandi said in an Aug. 26 note that the housing market should “enjoy something of a revival.”

Home sales, he wrote, “are currently depressed,” with data showing they are on par “with the sales pace suffered in the pandemic shutdown and the depths of the housing collapse during the financial crisis.” And this, he said as well, is due to the mortgage rate lock.

“Since mortgage rates jumped as high as 8% with the Fed’s tightening, it has made no economic sense for homeowners to move and give up their low-rate mortgages for one at a much higher rate,” he said. 

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