Spring homebuying season kicks off with stronger demand

The spring homebuying season is off to a stronger start this year, with mortgage applications for new home purchases posting solid year-over-year and monthly gains in March, according to the Mortgage Bankers Association (MBA).

MBA’s Builder Application Survey (BAS) showed that mortgage applications for new home purchases increased 5.5% compared to March 2024, and were up 14% from February, a sign of growing buyer interest fueled by more favorable borrowing conditions and increasing new-home inventory.

“Applications for new home purchases increased in March, consistent with typical seasonal patterns and supported by mortgage rates that had been drifting lower,” said Joel Kan, MBA’s deputy chief economist. “The growing inventory of newly built, move-in ready homes supported homebuyer interest over the month, pushing the index higher than last year’s levels.”

The upward trend in demand comes as mortgage rates have held below 7% for 13 consecutive weeks. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage was 6.83% as of April 17, slightly up from 6.62% the previous week, but still lower than the 7.1% average during the same period last year.

“At this time last year, rates reached 7.1% while purchase application demand was 13% lower than it is today, a clear sign that this year’s spring homebuying season is off to a stronger start,” said Freddie Mac chief economist Sam Khater.

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Despite the application growth, MBA’s estimate of seasonally adjusted new home sales declined slightly month over month, falling 0.8% to an annual rate of 629,000 units in March from 634,000 in February. However, the pace of sales remained ahead of last year’s numbers. On an unadjusted basis, new home sales rose to 61,000 units in March, a 7% increase from February’s 57,000 units.

“Our estimate of seasonally adjusted new home sales saw a slight decline in March but were stronger than last year’s pace of sales," Kan said.

MBA’s application data, which is a leading indicator for the US Census Bureau’s New Residential Sales report, also revealed a shift in loan product mix and buyer behavior. The average loan size for new homes fell from $397,516 in February to $381,921 in March, indicating stronger demand at more affordable price points.

By loan type, conventional loans accounted for 49% of applications, FHA loans made up 37%, VA loans 13%, and RHS/USDA loans 0.9%.

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