Thirty-year mortgage rates effectively held steady this week at 6.201%, according to U.S. News data. That’s a negligible difference from 6.2% last week.
Mortgage rates have largely been falling since the beginning of the year. Prospective buyers are hoping to see this trend continue into spring, when home purchase activity tends to pick up.
For the week ending Feb. 20, mortgage applications only increased 0.4% from the week prior, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. The fact that mortgage activity has been slow to pick up indicates that buyers may be waiting for borrowing rates to fall even lower before making a move.
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Mortgage Applications Rose In January, But Pending Home Sales Decreased
In January, mortgage applications for new home purchases rose 2% year over year, according to the MBA’s Builder Application Survey. Compared with December, applications rose 19%.
“New home purchase activity strengthened in January, as both mortgage applications and new home sales saw gains,” said Joel Kan, MBA’s vice president and deputy chief economist, in the report. “This increase was consistent with single-family housing starts finishing 2025 at a stronger pace, even as permitting stayed relatively flat.”
On the other hand, the National Association of Realtors found that pending home sales decreased 0.8% on a monthly basis in January. On an annual basis, they fell 0.4%. Pending home sales represent properties where a seller has accepted an offer and the property has gone under contract.
“Improving affordability conditions have yet to induce more buying activity,” said NAR Chief Economist Lawrence Yun in the report.
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More Buyers Could Soon Enter the Market
Although buyers have been slow to act in the wake of falling mortgage rates, it’s worth noting that winter has historically been a slow time for the housing market. Factor in the effects of an active winter weather season, and it’s not surprising to see a decline in pending home sales.
That said, falling rates could allow more buyers to enter the market this year. Whether that’s a good thing, though, may largely depend on inventory.
“With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates,” Yun said. By his estimates, an additional 550,000 new buyers could enter the market this year compared with last year.
Yun warned, though, that if housing supply doesn’t increase, an increase in the buyer pool could drive home prices upward.
In January, there was only a 3.7-month supply of homes on the market, per the NAR’s Existing-Home Sales Report. That’s well below the five- to six-month supply typically needed for a balanced market. However, if mortgage rates continue on their current trajectory, it could allow more “trapped” homeowners to move, creating an influx of additional homes for sale.
Many current homeowners bought when rates were lower or refinanced when rates plunged during the pandemic. People in that boat may be loath to give up their current mortgage rates, especially since home prices remain elevated. But if rates continue to creep downward, some homeowners may be motivated to sell, which could help address the current inventory shortage.
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Mortgage Rates Hold Steady in Late February originally appeared on usnews.com
