Mortgage applications increased for the third consecutive week as average interest rates edged lower, providing a glimmer of hope for homebuyers who have been sidelined by affordability challenges.
The Mortgage Bankers Association reported that application volume rose 5.2% from the previous week, with purchase applications showing particularly strong gains. The average 30-year fixed mortgage rate fell to 6.45%, down from 6.62% the prior week.
First-Time Buyers Return
First-time homebuyers, who have been disproportionately affected by high rates and limited inventory, are showing renewed interest in the market. Real estate agents report increased foot traffic at open houses and more serious inquiries from qualified buyers.
"Every quarter point drop in rates brings more buyers off the sidelines," said housing economist Jennifer Park. "While rates remain elevated by historical standards, we're seeing buyers adjust their expectations and budgets."
Inventory Challenges Persist
Despite the uptick in demand, inventory levels remain constrained in many markets. Homeowners with low-rate mortgages are reluctant to sell, creating a "lock-in" effect that limits available properties.
New construction activity has helped partially offset the existing home shortage, with builders reporting strong demand for entry-level and moderately priced homes.