Mortgage rates dropped significantly on Thursday after the Trump administration announced new tariffs.
The average rate for a 30-year fixed mortgage fell 12 basis points to 6.63%, according to Mortgage News Daily, marking its lowest level since October.
The sharp decline came as a major sell-off in the stock market pushed investors toward bonds, driving bond yields lower. Since mortgage rates generally track the 10-year U.S. Treasury yield, they had been moving within a tight range since late February.
“While there’s still uncertainty about the details of Wednesday’s tariff announcement, markets are already bracing for its impact on global trade,” said Matthew Graham, chief operating officer at Mortgage News Daily.
This drop in rates arrives just as the housing market enters its busy spring season. However, several affordability challenges remain for buyers.
For the four weeks ending March 30, the typical U.S. homebuyer’s monthly mortgage payment hit a record high for the second consecutive week at $2,802, according to real estate brokerage Redfin.
Home sale prices have risen 3.4% year-over-year, while the average weekly mortgage rate of 6.65% remains more than double pandemic-era lows, Redfin’s report noted.
Despite the recent dip in rates, affordability remains a significant issue. The National Association of Home Builders estimates that about 70% of households—roughly 94 million—cannot afford a $400,000 home. The median price of a new home is projected to be around $460,000 in 2025.
To afford a $200,000 home at a 6.5% mortgage rate, a buyer needs a minimum income of $61,487. By 2025, approximately 52.87 million U.S. households will earn no more than that amount, limiting their buying power to homes priced at $200,000 or less.
While more homes are entering the market, they are often priced higher than what many buyers can afford. The overall supply also remains low due to years of underbuilding following the Great Recession.
“Inventory is increasing. Many homeowners I’ve spoken with over the past couple of years are now ready to list,” said Matt Ferris, a Redfin agent in northern Virginia.
“Some think we’re at the market’s peak and want to sell at top dollar. In the D.C. area, some sellers are concerned about job security in government roles or want to move closer to the city due to in-office policies.”
March saw a 10% annual increase in new home listings, and active listings rose by about 28% compared to last year, according to Realtor.com.
However, homes are staying on the market longer, and more sellers are cutting prices. Pending home sales—signed contracts for existing homes—dropped 5.2% from last March in major metropolitan areas.
Markets in Jacksonville, Florida (-15.1%), Miami, Florida (-13.7%), and Virginia Beach, Virginia (-14.2%) experienced some of the largest declines. The softening demand in Florida is partially linked to a reversal of pandemic-driven migration trends.
“The high cost of buying, coupled with economic concerns, is slowing buyer activity this spring. However, the market is rebalancing, giving shoppers more options,” said Danielle Hale, chief economist at Realtor.com.
“If mortgage rates continue improving, the later spring and early summer housing season could see more activity, provided economic uncertainty doesn’t disrupt buyer confidence.”
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