Following recent Federal Reserve interest rate cuts, mortgage rates are trending downwards, with about 81% of existing mortgages carrying a rate of 6% or lower. A new report from Realtor.com® revealed that metros with younger populations are positioned to benefit most from lower mortgage rates.
Nationally, around 64% of all U.S. occupied homes are owned, and two-thirds of those homeowners have a mortgage. By contrast, homeowners without any outstanding debt tend to be older, as nearly 54% of all outright-owned homes are held by people ages 65 and up.
Realtor.com Chief Economist Danielle Hale said falling mortgage rates can spark opportunity for many potential homebuyers and sellers, but the market shift greatly depends on how many homeowners have mortgages.
“In markets like Denver or Washington, D.C., where most owners are still paying off their mortgages, lower rates are more likely to spark renewed activity,” Hale said. “Meanwhile, metros with older populations and more outright owners, like Buffalo or Miami, may see a lower market-level response, even though lower rates are a difference-maker for some individuals in these markets.”
In Washington, D.C., almost 75% of owned homes have a mortgage, with Denver and Virginia Beach following closely behind. As borrowing costs decline, these metros, along with Raleigh, San Diego, Baltimore, Atlanta and Seattle, are most likely to see buyer demand accelerate in the coming months.
On the other hand, metros with a higher concentration of older homeowners, like Miami, Buffalo, Pittsburgh, Detroit and Tampa, have a much larger share of outright owners, leaving them less sensitive to mortgage rate shifts.
Zooming out to look at the regional picture, the West has the highest rate of owner-occupied homes with a mortgage, at 64.3%. Following behind are the Northeast and Midwest, both around 59%. The South comes in last, with the lowest rate of mortgaged homes at 57.5%.
Realtor.com economists emphasize that falling mortgage rates can expand affordable options, especially for first-time buyers entering the market. For sellers, the outlook varies widely by market: in high-mortgage metros, sellers could experience intense competition and faster-moving markets—while in outright-owner markets, they could experience more stable conditions.
To read the full report, click here.
