Mortgage rates saw a significant decline following the Trump administration’s latest tariff announcement, offering a potential boost to the housing market as the spring season gathers momentum. However, affordability concerns remain widespread, dampening enthusiasm among prospective homebuyers.
According to data from Mortgage News Daily, the average rate for a 30-year fixed mortgage dropped by 12 basis points to 6.63%, marking its lowest point since October 2024. The decline was triggered by a sharp sell-off in the stock market, prompting investors to move their money into the relative safety of bonds. This shift drove down bond yields, which mortgage rates tend to follow — particularly the yield on the 10-year U.S. Treasury note.
“While the full implications of the new tariffs remain unclear, markets are clearly bracing for disruption in global trade,” said Matthew Graham, Chief Operating Officer at Mortgage News Daily.
Lower Rates, But High Costs Still Lock Out Millions
The timing of the rate drop aligns with the housing market’s typically active spring period. Yet, despite lower borrowing costs, housing affordability continues to pose a major barrier. Home prices remain elevated, and mortgage payments are still out of reach for a significant portion of the population.
A recent Redfin report shows that for the four-week period ending March 30, the typical monthly mortgage payment for a U.S. homebuyer hit a new record high of $2,802 — the second consecutive weekly record. While mortgage rates have eased slightly, they still remain well above pre-pandemic levels. The report noted a 3.4% year-over-year increase in home sale prices, and an average mortgage rate of 6.65%.
The affordability crisis is particularly stark when compared to household incomes. Based on estimates by the National Association of Home Builders, around 70% of U.S. households — roughly 94 million — cannot afford a $400,000 home, which is below the current median price of $460,000. At an interest rate of 6.5%, buyers would need a minimum annual income of $61,487 to purchase a $200,000 home. However, more than 52 million households fall below this income threshold.
Inventory Grows, But Not Where Buyers Need It
While housing supply is increasing, most of the inventory growth is concentrated in higher-priced segments. The market continues to suffer from a shortage of affordable homes — a lingering effect of underbuilding in the years following the Great Recession.
“We’re starting to see more sellers come forward,” said Matt Ferris, a Redfin agent in northern Virginia. “Some think prices have peaked and want to cash in, while others are motivated by job security concerns or new in-office work requirements.”
Realtor.com data shows a 10% annual increase in new listings in March, with total active listings rising 28% year over year. However, homes are also taking longer to sell, and price reductions are becoming more common. Pending sales — a key indicator of housing activity — were down 5.2% from March 2024 in the top metropolitan areas.
Markets in Florida have seen particularly steep drops. Pending sales in Jacksonville declined by 15.1%, while Miami saw a 13.7% drop. Virginia Beach, Virginia, also reported a 14.2% decline in pending sales. Experts attribute this trend partly to the reversal of pandemic-era migration patterns.
“The high cost of homebuying combined with broader economic uncertainty is cooling buyer enthusiasm,” said Danielle Hale, Chief Economist at Realtor.com. “Still, recent improvements in mortgage rates could bring renewed interest later in the spring and into early summer — provided the broader economic outlook stabilizes.”
Despite the dip in mortgage rates, the housing market remains a tough landscape for many Americans. Unless supply shifts toward lower-cost homes and wage growth keeps pace, affordability will continue to limit who can participate in the market recovery.
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