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Spring hasn’t officially sprung yet, but the spring housing market already appears to be on the move despite stubbornly higher mortgage rates.
Mortgage applications to purchase a home increased 11% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand was still 8% lower than the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.02% from 7.04%, with points unchanged at 0.67 (including the origination fee) for loans with a 20% down payment.
“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,” said Mike Fratantoni, senior vice president and chief economist at the MBA. “Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory.”
There were 14.8% more homes actively for sale in February compared with the same time last year, according to Realtor.com. Notably, homes priced in the $200,000 to $350,000 range grew by 25% from a year ago, outpacing all other price categories.
“The first couple of months of 2024 have proven to be positive for inventory levels, as the number of homes actively for sale was at its highest level since 2020,” said Danielle Hale, chief economist for Realtor.com, who noted that while supply is still well below pre-pandemic levels, the South, where homes are less expensive, is leading the charge.
Applications to refinance a home loan increased 8% for the week and were 2% lower than the same week one year ago. The rise has less to do with the small drop in rates and is more likely due to the number being so low that any weekly move in either direction is outsized in the percentage change. There are very few borrowers today with rates that are high enough to benefit from a refinance.
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