You've probably heard that mortgage rates are high and the housing market is difficult. But most reports miss some important signs: the housing market is starting to show life again.
Mortgage purchase applications are increasing compared to last year. Even though rates are still higher than 6.5%, more buyers are becoming interested. It's not a major rush, but it's worth noticing.
What Are Mortgage Purchase Applications?
Mortgage purchase applications are when people apply for loans to buy homes. This data usually predicts home sales 30 to 90 days in advance. It's a helpful way to see market changes before they become big news.
In the first 10 weeks of 2025:
4 weeks showed increases
3 weeks stayed the same
3 weeks decreased
This doesn't sound huge, but most weekly numbers this year are positive, and applications are higher than last year for the first time in a while. When applications go up, it's usually a sign more people want to buy homes.
Peak Home Sales Happened Early in 2023 and 2024
In both 2023 and 2024, home sales increased briefly at the beginning of the year but then slowed down. This happened because of mortgage rates.
For example, at the end of 2023, mortgage rates went above 8%. Then, rates dropped to about 6.63% in January 2024. This decrease helped buyers become more active, but sales slowed again when rates increased.
In both years, home sales peaked early because buyers reacted quickly to temporary lower rates. When rates rose again, buyers left the market.
Why 2025 is Different
This year, mortgage applications are increasing even though rates haven't dropped much. As of mid-March 2025, the average 30-year mortgage rate is around 6.7%. Although that's still high, it's better than the 8% rates from late 2023.
Logan Mohtashami from HousingWire noted, "Unlike the last few years, when rates went up and applications dropped, this year the data is still positive compared to last year. It's been a long time since I could say that."
If mortgage rates go down to around 6% and stay there, experts believe demand will rise even more.
Final Thoughts
Mortgage purchase applications are increasing, even without lower mortgage rates. This means buyers are starting to return to the market, especially those who've been waiting for conditions to improve.