As we approach the official start of spring, the housing market is already showing signs of movement. Despite the fact that mortgage rates remain high, there was an 11% increase in mortgage applications to purchase a home last week compared to the previous week. However, it is important to note that demand is still down by 8% compared to the same period last year.
According to data from Realtor.com, there was a 14.8% increase in the number of homes actively for sale in February compared to the previous year. Particularly noteworthy is the growth in homes priced in the $200,000 to $350,000 range, which saw a 25% increase from the previous year, outpacing all other price categories. This increase in inventory levels bodes well for the upcoming spring buying season, especially considering the current lack of for-sale inventory.
While applications to purchase a home saw a significant increase, applications to refinance a home loan also rose by 8% for the week. However, this increase is not necessarily attributed to the slight drop in mortgage rates but more likely due to the fact that the numbers are currently so low that any movement in either direction is magnified.
First-Time Homebuyers’ Sensitivity to Rates
The surge in purchase volume, particularly for FHA loans, highlights the sensitivity of the first-time homebuyer segment to even small changes in mortgage rates. This indicates that as rates fluctuate, there may be corresponding shifts in the demand for home purchases.
Despite the challenges posed by higher mortgage rates, early indicators suggest a relatively positive outlook for the spring housing market. With increases in both purchase volume and inventory levels, along with refinancing activity, the market seems to be moving in the right direction. However, it will be important to monitor how these trends continue to evolve as we progress through the spring season.
Leave a Reply