As Rates Fall, Monthly Payments Follow

The Big Story

Quick Take:

Housing got substantially more affordable on a year-over-year basis in December.
Rates continue to fall, as lending markets price in lower long-term interest rates.
Inventory and sale metrics are roughly in line with what we were seeing around this time last year.
Despite the fact that we’ve seen interest rates come down quite a bit over the last year, median home sale prices are roughly in line with where they were last year!

📉 As Rates Fall, Monthly Payments Follow

With the Federal Reserve continuing its rate-cutting cycle, mortgage rates have steadily declined — and monthly payments are reflecting that shift.

The current median monthly P&I payment is $2,023, down 5.02% from $2,130 one year ago. That means more breathing room for homeowners — whether that’s extra savings, investment potential, or flexibility for a future move.

At the start of December, the average 30-year mortgage rate was 6.15%, and it has edged lower since.

📊 Mortgage Rates at Multi-Year Lows

Lending markets are signaling that rates may remain relatively stable in the near to mid-term, helping push mortgage rates to their lowest levels in the past three years.

However, expectations for an immediate Fed cut remain low. CME FedWatch currently shows just a 7.9% probability of a March rate cut. That said, projections further out suggest we could still see one or two cuts later this year.

🏘️ Inventory and Sales Are Holding Steady

Even as affordability improves, overall housing activity remains close to last year’s levels:

Existing home sales are up 1.40% year-over-year
Inventory is up 3.51%
New listings are up just 0.68%

This suggests many buyers are still waiting for further rate relief before making a move. As we transition from the slower winter months into the traditionally busier spring and summer season, any additional rate cuts could accelerate activity — and potentially increase competition.

⚖️ Rates Likely to Hold Steady (For Now)

Current market expectations suggest rates may remain steady through the next FOMC meeting or two. While there has been speculation about future Fed leadership influencing policy direction, markets are not pricing in major disruption at this time.

For now, stability appears to be the theme — but Fed commentary and economic data will remain important to watch.

📍 Real Estate Is Local

While national trends provide helpful context, real estate is ultimately driven by local market conditions. Inventory levels, pricing trends, and buyer activity can vary significantly from one area to the next, making local insight essential when evaluating timing and opportunity.