Insights into the Spring Housing Market Amidst Higher Mortgage Rates

Despite spring not officially commencing, early signs indicate a bustling spring housing market, despite persistent high mortgage rates.

According to the Mortgage Bankers Association’s data, mortgage applications for home purchases surged by 11% last week compared to the previous week, albeit remaining 8% lower than the same period last year.

The average interest rate for 30-year fixed-rate mortgages slightly decreased to 7.02%, with points remaining stable at 0.67 for loans with a 20% down payment. Mike Fratantoni, the MBA’s senior vice president and chief economist, highlighted the strong increase in purchase volume, particularly for FHA loans, suggesting heightened sensitivity among first-time homebuyers to slight rate fluctuations.

Realtor.com reported a significant uptick in active home listings in February, with a notable 14.8% increase compared to the previous year. Of particular interest, homes priced between $200,000 and $350,000 saw a remarkable 25% growth from the previous year, surpassing all other price categories. Danielle Hale, chief economist for Realtor.com, emphasized the positive trend in inventory levels, especially in the South, where more affordable homes are driving market activity.

Despite these encouraging trends, applications to refinance home loans saw an 8% increase for the week, yet remained 2% lower compared to the same period last year. This rise is likely due to the low number of borrowers who stand to benefit from refinancing, given the prevailing high mortgage rates.