Lower Mortgage Rates Spark Buyer Interest! Will Sales Follow?

Written by David Dodge 

The recent decline in mortgage rates has sparked increased interest in homebuying. However, this surge in activity has yet to translate into higher home sales.

With mortgage rates reaching their lowest point since mid-December, more prospective buyers are actively searching for homes. Mortgage-purchase applications have jumped by 7% in the past week, reaching their highest level since early February. Additionally, Google searches for "homes for sale" have surged by 10% year over year, marking their highest point since last summer. Redfin’s Homebuyer Demand Index, which tracks home tours and other buyer activities, has also reached its peak for the year.

Despite this heightened interest, actual home sales remain sluggish. Pending home sales saw a 6.1% decline compared to the previous year during the four-week period ending March 9. This mirrors the downward trend observed in recent months.

Why Are Buyers Hesitant? Redfin’s Economic Research Lead, Chen Zhao, attributes the mortgage rate drop to growing economic uncertainties. Concerns about tariffs and a softer job market have contributed to this shift. While lower rates have encouraged more buyers to explore the market, many remain cautious about making purchases due to broader economic worries, such as job security and the possibility of a recession.

More Listings Hit the Market On the selling side, there has been a modest increase in available homes. New listings are up by 3.1% year over year, following a steady rise over the past month. As spring approaches and demand continues to build, more homeowners are expected to list their properties.

Key Market Trends and Data Several leading indicators reflect the shifting dynamics in the housing market:

• Mortgage Rates: The daily average 30-year fixed mortgage rate sits at 6.82% as of March 12, slightly up from the previous week but still near its lowest level since December. The weekly average is 6.63%.

• Homebuyer Activity: Touring activity is up by 32% since the beginning of the year, exceeding last year’s growth during the same period.

• Search Interest: Online interest in home listings has increased, with Google searches for “homes for sale” rising by 10% compared to last year.

Current Housing Market Metrics (Four Weeks Ending March 9, 2025):

• Median Sale Price: $381,975 (+3.2% YoY)

• Median Asking Price: $421,225 (+6.1% YoY)

• Pending Sales: 77,182 (-6.1% YoY)

• New Listings: 88,739 (+3.1% YoY)

• Active Listings: 925,690 (+9.3% YoY)

• Months of Supply: 4.1 months (lowest level of the year)

• Median Days on Market: 52 days (+7 days YoY)

Regional Highlights Different metropolitan areas are experiencing varying trends. Cities like Milwaukee, Cleveland, and Anaheim have seen significant year-over-year price increases, while markets such as Austin, Jacksonville, and Tampa have recorded slight declines. Similarly, new listings have surged in metros like San Jose and Sacramento but have dropped in cities like Detroit and Austin.

Looking Ahead The housing market is currently at a crossroads. While falling mortgage rates have spurred interest among potential buyers, economic uncertainty continues to weigh on purchasing decisions. Whether this heightened demand will translate into more home sales largely depends on broader economic factors, such as employment stability and consumer confidence. As we move into the spring and summer months, market watchers will be paying close attention to mortgage trends, job growth, and overall economic conditions to determine the trajectory of the housing market in 2025.

For buyers and sellers alike, staying informed about these changes will be key to making strategic real estate decisions in the months ahead.