Rosalind Evans
As the calendar edges closer to the official start of spring, the housing market is already showing signs of robust activity, with a significant uptick in mortgage applications indicating a promising season ahead. Despite the persistence of high mortgage rates, which have deterred some potential homebuyers over the past months, the latest data from the Mortgage Bankers Association (MBA) reveals a notable surge in demand. Last week, mortgage applications to purchase a home jumped by 11% compared to the previous week, though they remain 8% lower than last year.
This increase is particularly noteworthy given the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, which decreased slightly to 7.02% from 7.04%. Mike Fratantoni, the MBA’s senior vice president and chief economist, highlighted the resilience and sensitivity of the first-time homebuyer market, stating, “Of note, purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates.” This uptick is further buoyed by an increase in new listings, heralding a positive turn for the spring buying season amidst a tight inventory landscape.
Additionally, Realtor.com’s recent findings underscore the growing inventory, with a 14.8% year-over-year increase in homes actively for sale in February, marking the highest level since 2020. The affordability segment, particularly homes priced between $200,000 and $350,000, witnessed a significant 25% growth from the previous year, signaling a shift in market dynamics. Danielle Hale, a chief economist for Realtor.com, remarked on this trend, noting, “The first couple of months of 2024 have proven to be positive for inventory levels…the South, where homes are less expensive, is leading the charge.”
Refinancing activity also saw a modest increase of 8% for the week despite being 2% lower than the year before. This movement is attributed more to the low base effect than to the slight drop in rates, indicating a cautious optimism among homeowners evaluating refinancing options in the current rate environment.
As the spring housing market kicks off earlier than anticipated, the blend of increasing inventory, slight adjustments in mortgage rates, and renewed interest in home purchases, especially among first-time buyers, sets a hopeful tone for the season. While challenges remain, particularly with mortgage rates still on the higher side, the early surge in demand and listings is a welcome sign for buyers and sellers, hinting at a potentially vibrant spring market.
