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.

“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.