11% Surge in Weekly Mortgage Demand Signals Early Spring Market Activity

Despite the persistence of high mortgage rates, an 11% surge in weekly mortgage demand marks an early start to the spring housing market. This unexpected uptick suggests a growing eagerness among buyers to enter the market, even as challenges persist.

In the recent update, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances has seen a slight decrease, moving from 7.04% to 7.02%. This adjustment comes with the points remaining stable at 0.67, which includes the origination fee, for loans that have a down payment of 20%. This change, though minor, could signal a more accessible lending environment for potential homebuyers, contributing to the surge in mortgage demand observed.

A Closer Look at the Surge in Weekly Mortgage Demand

Data reveals an 11% increase in mortgage applications over the previous week, yet year-on-year figures show an 8% decrease. Meanwhile, the slight dip in interest rates for 30-year fixed-rate mortgages could be influencing buyer decisions, highlighting the market’s sensitivity to rate fluctuations.

“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.” -Danielle Hale, chief economist for Realtor.com
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Market Implications and Future Outlook

The rise in demand, especially noticeable in FHA loan applications, underscores the first-time homebuyer’s responsiveness to rate changes. With new listings on the rise, the spring market looks promising, despite a current inventory shortfall. The notable growth in homes for sale, particularly in the more affordable home segments, hints at a potential easing of inventory constraints.