Recent declines in mortgage rates have led to an increase in housing purchase applications and overall market activity in 2025, showing a strong positive shift compared to the prior year. After a tough 2024, characterized by consistent declines and stagnant growth, this year saw encouraging signs of recovery. The latest data indicated a 9% year-over-year increase in purchase applications. Typically, significant improvements in housing demand occur when mortgage rates fall closer to the 6% mark; a brief drop below 6.64% recently has sparked optimism for existing home sales this year.
Mortgage rates falling below 6.64% typically drives growth in housing demand data, yet even higher rates have shown year-over-year purchase application improvement in 2025.
Despite a positive trend, the housing market requires mortgage rates to dip closer to 6% for significant growth, following years of stagnation in purchase applications.
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