Mortgage rates have recently experienced a notable decline, reaching their lowest point since last October. This shift has brought considerable relief to prospective homebuyers across the United States, as monthly housing payments have decreased. While the benefits are widespread, some metropolitan areas have seen more significant reductions in housing costs than others. This trend highlights a broader improvement in housing affordability, even as the market continues to evolve.
The average rate for a 30-year new purchase mortgage began to ease in late July, culminating in a three-day slide that brought the average down to 6.48% on a recent Monday. This marks the lowest point for these rates in 11 months, a level not seen since October 4, 2024, when the average was 6.43%. This represents a substantial improvement from a month prior, specifically August 8, when the average stood at a higher 6.78%.
It's important to note that mortgage rates are not uniform across the country. Each state has its own average 30-year rate, with variations observed. As of September 8, rates ranged from a low of 6.35% in Florida to a high of 6.52% in West Virginia. This regional disparity, combined with fluctuations in median home prices, means that the impact on monthly payments varies significantly from one metro area to another.
In some of the nation's largest housing markets, the combined effect of lower interest rates and changing home prices has led to particularly steep relief for buyers. To quantify this, an analysis was conducted using median home prices from Realtor.com's August Monthly Housing Report and comparing monthly principal-and-interest payments based on September 8th's average 30-year mortgage rates against figures from August 8th. This revealed striking improvements in some areas.
For instance, Boston witnessed the most significant percentage decline among the 50 largest metros, with typical new loan payments dropping over 8%, saving buyers more than $350 monthly. In Los Angeles, despite higher home prices, buyers benefited from an almost $450 reduction per month, representing a 7.5% improvement. Even more affordable cities like Buffalo and Birmingham, Alabama, experienced sharp declines of 6.2% and 6.6% respectively, making them the most budget-friendly markets within the group of cities seeing the sharpest drops.
While the 16 metros mentioned saw the most substantial monthly savings, the good news extends to all 50 of the largest metropolitan areas, where monthly payments decreased. This widespread reduction in housing costs suggests a more favorable environment for homebuyers as the market continues to adjust. The ongoing question remains whether these rates will hold steady or decline further throughout 2025.