The US housing market is waking up.
After years of stalled activity, the market seems to be gaining new momentum as lower borrowing costs draw prospective buyers from the sidelines.
The average 30-year fixed mortgage rate cooled to around 6.26% in the last week, according to Freddie Mac, down 150 basis points from its peak in mid-2023.
Lower home prices are also helping. The median home-sale price eased to $410,800 in the second quarter, down 7% from its peak in late 2022.
"Affordability conditions have improved for four straight months, with lower mortgage rates and stronger income growth boosting prospective buyers' purchasing power," Edward Seiler, the associate vice president of housing economics at the Mortgage Bankers Association, wrote on Wednesday.
Still, the burst of activity might not be all good for homebuyers. More demand in the market means prices could remain elevated, and housing experts have said they predict a rush of buyers to hit the market once rates decline further.
Here are the signs that Americans are jumping on the opportunity to buy a home for now:
1. New home sales surge
Sales of new homes jumped 20.5% for the month and 15.4% year-over-year in August. In monthly terms, that's the largest increase in new home sales the US has seen in three years, according to Census data released on Wednesday.
Total new home sales rose to a seasonally adjusted 800,000 for the month. That's the fastest pace new homes have gone off the market since January 2022, around the time interest rates across the economy began to rise.
Existing home sales inched up 2% over the month of July, according to the latest data from the National Association of Realtors. A Fannie Mae analysis this week estimated that existing home sales could surge 9.6% in 2026.
2. Mortgage demand spiked
Borrowing activity has jumped in recent weeks. Mortgage applications rose 9.2% in the week ending September 5, which marked the strongest week for mortgage demand since 2022, according to Joel Kan, MBA's deputy chief economist.
Mortgage applications then jumped 29.7% in the following week before the pace of growth cooled to 0.6% in the week ending September 19.
3. Refinancing boom
More Americans are also jumping on the opportunity to refinance their home loans as rates come down. Refinancing activity was up 42% year-over-year the week ending September 19, per the MBA.
"Refinance volume increased further last week and is now 80 percent higher than four weeks ago, accounting for more than 60 percent of all application activity," Mike Fratantoni, the chief economist of the group, said in a statement.
