The housing market could be showing signs of change as mortgage applications rose for the third consecutive week, according to new data released from the Mortgage Bankers Association (MBA).
Applications for mortgages climbed by 6.3 percent on a seasonally adjusted basis for the week ending November 22, the association said Wednesday. Last week, applications surged by 1.7 percent following a 0.5 percent boost the week before.
This could be a signal that housing demand is growing heading into the year's end.
Refinance applications dipped by 3 percent week over week but remained 119 percent higher year-over-year.
"Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months," Joel Kan, MBA vice president and deputy chief economist, said in a statement.
While interest rates have remained high for buyers, an uptick in housing inventory is allowing more Americans to enter the home-buying market, Kan said.
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, said the uptick in mortgage applications was sparked by slightly lower interest rates and overall optimism that rates will fall further in the coming years.
The average contract interest rate for a 30-year fixed-rate loan with conforming balances dropped to 6.86 percent from 6.90 percent, showing some slow but steady progress in mortgage affordability.
Freddie Mac's most recent Primary Mortgage Market Survey also found the average 30-year fixed-mortgage rate declined to 6.81 percent compared to last week's 6.84 percent.
"There have been many barriers for home buyers in terms of entering the market, with one being that monthly mortgage payments on some properties are actually higher than rents in some major U.S. cities," Beene told Newsweek.
"While interest rates haven't fallen enough to see a sizable impact to those monthly payments, there's an overwhelmingly positive outlook that the Trump administration will push for lower rates in the months ahead. More than likely, some buyers are purchasing now in the hope they'll be able to refinance for lower rates in the near future."
Some potential buyers have been sitting on the sidelines of purchasing a new home for a while, said Alan Chang, title and escrow expert.
"With some markets leveling off in valuations, combined with a slightly better interest rate, home affordability has started to improve slightly in pockets across the nation," Chang told Newsweek.
In Zillow's newest housing forecast, the company predicted home prices would once again rise slightly in 2025.
"Zillow forecasts 2.6 percent home value growth in 2025, a relatively slow pace that is similar to this year's growth," it said in a statement Monday. "For existing home sales, Zillow forecasts 4.3 million in the coming year, up slightly from 4.1 million in 2023 and a projected 4 million in 2024."
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