On Thursday, mortgage rates exhibited a notable decrease following the Trump administration’s tariff announcement. The average interest rate for a 30-year fixed mortgage fell by 12 basis points to 6.63%, marking its lowest level since October, as reported by Mortgage News Daily.

Market Reactions and Bond Yields

The significant decline in stocks prompted investors to seek stability in the bond market, resulting in decreased bond yields. Mortgage rates typically correlate with the yield of the 10-year U.S. Treasury, which has remained within a narrow range since late February.

Matthew Graham, the Chief Operating Officer at Mortgage News Daily, noted, “While plenty of uncertainty remains over the finer points of Wednesday afternoon’s tariff announcement, markets have heard enough to brace for impact on global trade.”

Impact on Homebuyers and Affordability

The reduction in mortgage rates comes as a welcome change for potential homebuyers, especially with the historically active spring selling season approaching. However, several factors continue to challenge home affordability.

In the four weeks ending March 30, the average monthly payment for a U.S. homebuyer escalated to $2,802, reaching record levels for the second consecutive week, as stated by Redfin. Despite a slight decrease in mortgage rates to approximately 6.65%, home prices are increasing, contributing to affordability issues.

• Sale prices rose by 3.4% year-over-year.
• Seventy percent of U.S. households, about 94 million, cannot afford a $400,000 home.
• The estimated median price of a new home is projected to hit around $460,000 in 2025, according to the National Association of Home Builders.

Challenges in the Housing Market

The minimum income required to buy a $200,000 home, given a mortgage rate of 6.5%, stands at approximately $61,487. It is estimated that by 2025, around 52.87 million U.S. households will earn too little to afford anything above this price point.

Although the housing supply is gradually increasing, the available homes are generally not aligned with the lower pricing demands—historically, the inventory remains well below average due to prolonged underbuilding since the Great Recession.

Current Inventory and Market Trends

According to Realtor.com, March saw a notable 10% increase in new home listings year-over-year, with active listings up by approximately 28%. However, homes are taking longer to sell, and there has been an uptick in price reductions. Furthermore, pending sales on existing homes are down by 5.2% compared to the previous year.

Particularly marked declines in sales were witnessed in cities like Jacksonville and Miami, Florida, with reductions of 15.1% and 13.7% respectively.

Danielle Hale, Chief Economist for Realtor.com, noted, “The high cost of buying coupled with growing economic concerns suggest a sluggish response from buyers in early spring. We’re seeing a market that’s rebalancing, offering more choices for shoppers.”