Washington, D.C.: In a surprising twist for the U.S. housing market, homebuyers are showing renewed interest—despite mortgage rates holding steady near 7%.
According to new data, mortgage applications rose 2% last week, marking the second consecutive weekly increase. The prior week saw an 11% jump, bringing home purchase demand up 18% year-over-year, the largest annual increase since November 2024, excluding a brief April spike triggered by tariff-related rate drops.
Mortgage Rates Hold Steady, But Buyer Behavior Shifts
As of this week, the average 30-year fixed mortgage rate sits at 6.95%, barely budging from the 6.8–7% range it’s occupied since the start of May. Even with last week’s cooler CPI data offering hints of relief, rates remained flat.
Yet, against this backdrop of relative rate stability, buyer activity is surging—a trend catching many market watchers off guard.
“It’s not about the rates right now,” said CNBC real estate correspondent Diana Olick. “Buyers are back. They’re not flooding the market, but they are stepping in—and they’re motivated.”
Advertisement
What’s Behind the Surge in Demand?
Real estate agents and homebuilders had expressed caution throughout April, citing uncertainty over tariffs, market volatility, and economic direction as reasons for a dip in buyer interest. But that narrative appears to be shifting quickly.
An agent from Cleveland reported seeing “three times more buyers in the past two weeks than in the past few months.” Others suggest that rising inventory and improved negotiating power are helping pull hesitant buyers off the sidelines.
According to Redfin, housing inventory at the end of April was up 18% year-over-year, giving buyers more choices and leverage in a market that has long favored sellers.
A Spring Turnaround?
Spring typically kicks off the busiest season in real estate, but this year started on a sluggish note. Now, with two straight weeks of rising mortgage applications and signs of growing consumer confidence, May may be signaling a turning point for the 2025 housing market.
While rates remain elevated compared to pandemic-era lows, stability may be offering clarity for buyers who have waited on the sidelines. Whether this momentum holds remains to be seen, but for now, signs point to a market that’s warming up.