For several years, high mortgage rates have frozen much of the housing market. Many homeowners who were locked in at prior lower rates remained unwilling to sell and assume a new, more costly mortgage. However, as rates begin falling, a new Realtor.com® analysis reveals the metro areas that could see the earliest signs of thawing in the form of increased seller and refinance activity.

The Unlocked Markets

These markets have the highest share of recent home sales when rates averaged over 6.5%. Homeowners in these areas are now “unlocked” and in a position to refinance or sell and buy a new home at a lower rate. Leading the list is Naples, FL, where 15.2% of mortgages are estimated to be above the 6.5% cutoff, compared with the national average of just 5.3% of all mortgages.

Other Florida metros in the top 10 include Miami and Cape Coral. St. Louis placed second, with 13.9% of owner-occupied homes now unlocked by lower rates. The list also includes cities like Fort Wayne, IN; Albuquerque, NM; Kansas City, MO; and New Haven, CT, which vary widely in geography and affordability.

Projected Mortgage Rate Trends

The Realtor.com economic research team projects that mortgage rates will fall to 6.3% by the end of this year as the Federal Reserve begins cutting its benchmark rate. If this scenario plays out as expected, the identified cities could be among the first to benefit.

Homeowners’ Dilemma

Realtor.com senior data analyst Hannah Jones explains, “From this point forward, assuming rates continue to ease, selling or refinancing may look increasingly attractive to many homeowners in these markets. Homeowners who have felt ‘locked in’ by mortgage rates are likely to feel increasingly eager to sell as rates improve.” However, Jones notes that, for the time being, the marginal benefit of selling might be too small for recent buyers, leading them to opt for refinancing instead.

Recent Population Growth and Home Prices

The cities identified by Realtor.com share one common factor: an unusually large share of homes purchased fairly recently, when average rates exceeded 6.5%. Many of these cities have experienced significant population growth, including Naples, Cape Coral, Fort Myers, and Myrtle Beach. High demand from homebuyers has driven explosive growth in home prices. For example, in Naples, home prices grew 69% from 2020 to 2023, according to federal data.

Signs of Market Balance

There are signs that the markets in question are moving back toward balance between buyers and sellers, which could improve further as mortgage rates fall. Inventory climbed annually in July in each of these markets, despite still-high mortgage rates. This means that buyers in these areas stand to enjoy ample home options even today and can take advantage of falling rates.

Estimating Unlocked Mortgages

To estimate the cities with the highest share of existing mortgages that are now unlocked, we used data from deed records and Optimal Blue. We analyzed the number of home sales in each metro area during months since 2020 when local mortgage rates averaged more than 6.5%. These transactions are expressed as a share of the metro’s total number of owner-occupied housing units, according to the U.S. Census Bureau, to estimate the share of local mortgages above the 6.5% threshold.