The 10 Markets That Could See the Biggest Home Affordability Gains as Mortgage Rates Drop

Mortgage rates are set to decline, and some areas could see bigger gains in home affordability than others.

A new Realtor.com® analysis shows the metro areas where affordability for the median earner will improve the most if rates drop to 6.3%, which could happen in the coming months.

In other words, the monthly savings on house payments from lower mortgage rates would be enough to bring a significant number of additional homes into reach for the typical homebuyer in these particular places.

The biggest winner would be Lakeland, FL, where the share of affordable listings would increase by 5.9 percentage points, to 52.9%, if rates dropped to 6.3% from their July average of 6.8%. That compares with a 3.2-point increase in affordability nationwide.

Other Florida cities in the top 10 include Deltona and Palm Bay. In Utah, Salt Lake City and Ogden were also among the top affordability gainers from falling mortgage rates.

Also making the list were El Paso, TX; Raleigh, NC; Providence, RI; and Boise, ID.

“These are markets where a lot of homes right now are just out of reach for the median earner,” says Realtor.com senior economist Joel Berner. “In these top markets, there is a concentration of homes that are right on the cusp of affordability.”

New Haven, CT, squeaks onto the list at No. 10, after achieving the same ranking on our separate, recent list of the top metro areas where lower rates could “unlock” the most seller activity.

It suggests that New Haven could be among the markets where falling mortgage rates bring significant benefits to both buyers and sellers.

Mortgage rates, which averaged 6.46% for the week ending Aug. 22, are expected to ease down in the coming months as the Federal Reserve begins a cycle of cuts to its benchmark interest rate.

The Realtor.com economic research team forecasts mortgage rates will fall to 6.3% by the end of this year.

To uncover where falling rates would drive the biggest home affordability gains, we determined the monthly home payments that would be affordable to the local median earner in each of the top 100 U.S. metros by population.

Affordable monthly payments are calculated as 2.5% of the local median annual income. That equals annual housing payments of 30% of income.

Assuming a 10% down payment, we calculated the share of active listings in each market that would be affordable at mortgage rates of 6.8% and 6.5%, including local tax and insurance rates. The gain in affordability is expressed as the percentage-point difference in affordability share before and after a rate drop.

The markets that could see the biggest affordability boost from falling rates

1. Lakeland, FL

Share of listings affordable to median earner at 6.3%: 52.9%
Percentage-point gain from 6.8%: 5.9
Median list price in July: $349,945

2. Salt Lake City, UT

Share of listings affordable to median earner at 6.3%: 30.7%
Percentage-point gain from 6.8%: 5.7
Median list price in July: $596,450

3. El Paso, TX

Share of listings affordable to median earner at 6.3%: 40.8%
Percentage-point gain from 6.8%: 5.4%
Median list price in July: $304,793

4. Raleigh, NC

Share of listings affordable to median earner at 6.3%: 52.4%
Percentage-point gain from 6.8%: 5.2%
Median list price in July: $464,012

5. Deltona, FL

Share of listings affordable to median earner at 6.3%: 42.2%
Percentage-point gain from 6.8%: 5%
Median list price in July: $399,950

6. Providence, RI

Share of listings affordable to median earner at 6.3%: 32.1%
Percentage-point gain from 6.8%: 5%
Median list price in July: $599,450

7. Boise, ID

Share of listings affordable to median earner at 6.3%: 26.9%
Percentage-point gain from 6.8%: 4.9%
Median list price in July: $599,450

8. Palm Bay, FL

Share of listings affordable to median earner at 6.3%: 58.3%
Percentage-point gain from 6.8%: 4.9%
Median list price in July: $398,750

9. Ogden, UT

Share of listings affordable to median earner at 6.3%: 42.3%
Percentage-point gain from 6.8%: 4.9
Median list price in July: $179,425

10. New Haven, CT

Share of listings affordable to median earner at 6.3%: 55%
Percentage-point gain from 6.8%: 4.9%
Median list price in July: $424,925