22 cities where homebuyers and owners will benefit most as interest rates tumble

• Affording a home still isn't cheap, but it's not the Herculean challenge it was a year ago.
• Mortgage rates are down, but many owners and buyers are waiting for them to fall more.
• Here are 22 real-estate markets that will gain from lower rates, according to Realtor.com.

Home affordability has improved significantly as mortgage rates slide from multi-decade-highs, and prospective buyers aren't the only ones celebrating.

Borrowing costs are far lower than they were last fall. The 30-year fixed mortgage rate is down from a peak of 7.8% last November to 6.1% on average, while the 15-year rate has fallen from 7% to 5.3%. Rates receded ahead of interest rate cuts, which arrived with a bang mid-September.

Mortgage rates should remain near 6% for the remainder of the year before ticking down to the high 5% range in early 2025, researchers at Realtor.com remarked in an October 8 report. That should help thaw a real-estate market that had frosted over due to elevated mortgage rates.

"These lower rates will offer some relief to homebuyers who have struggled with high rates in recent years, likely encouraging more buyers to return to the market," economic analyst Jiayi Xu wrote in the note.

Property owners are also poised to benefit from lower rates, Xu and her colleagues noted. Not only can they eventually refinance and save money, but they can also move without regrets.

Many owners are currently locked into the rock-bottom mortgage rates that were common in the late 2010s and early 2020s. In fact, Realtor.com recently found that 84% of homeowners are on mortgage with a rate below 6%.

"Although mortgage rates have eased, market rates continue to exceed current rates for most homeowners, keeping them locked in 'golden handcuffs,'" said Danielle Hale, Realtor.com's chief economist, in a statement for the report sent to Business Insider.

In other words, just as lofty mortgage rates weighed on home demand, they also have limited supply since owners who sell would likely have to hop on an expensive mortgage themselves. That has kept sellers on the sidelines, which has resulted in fewer available homes for buyers.

Once mortgage rates breach the 6% milestone, Xu expects more owners to list their homes — and she's not alone.

"I think that there's a lot of pent-up supply from folks, particularly who are being exposed to these ownership cost increases away from mortgage rates," real-estate analyst David Burt told Business Insider this summer. "If mortgage rates come down, you'll have a lot of new sellers."

22 real-estate markets set for a shakeup

When mortgage rates retreat to lower levels, Realtor.com believes metropolitan areas with a high percentage of homes on a mortgage will be impacted most, since buyers can get more options as listings surge.

Conversely, cities where a large number of homes are already paid off may not see the same increase in transaction activity as mortgage rates fall.

Below are the 22 metropolitan areas where at least 66% of owner-occupied homes are on a mortgage, according to Realtor.com, compared to the nationwide rate of 60.2%. Along with each real-estate market is the percentage of homes with and without a mortgage.