Driven by strong demand for conventional loans, mortgage applications to purchase homes were on the rise in the first week of May, jumping 13% from the same week a year ago. Despite economic uncertainty, refinancing surged 11%, up 51% year-over-year, largely due to a 26% jump in VA loan activity.

This growth suggests buyers are re-entering the market with greater confidence. At the same time, affordability remains a major hurdle. The median U.S. monthly housing payment hit a record high of $2,868, due to a combination of rising home-sale prices and persistent mortgage rates. While slightly lower than mid-April, the rate remains far above the lows seen during the pandemic.

Along with broader economic concern, these factors have somewhat dampened typical spring homebuying momentum. Purchases were down 6% in April. Pending home sales also declined 3.9%. A quirk in the calendar added to the slowdown - Easter landed nearly as late as possible, skewing the comparison.

Nevertheless, motivated buyers are actively searching. Home tours are outpacing last year’s levels, particularly for move-in ready homes in desirable neighborhoods.

On the supply side, sellers are gradually returning to the market. New listings rose 5.5% year-over-year, and the total number of homes for sale climbed 13.6%, largely because sales are moving more slowly.

With more to choose from, buyers are finding reason to be more selective, often requesting repairs and negotiating harder on price. Sellers who price homes realistically from the outset may avoid future price reductions or lingering listings.

Properties that check all the boxes - modern, well-maintained, and fairly priced - are more likely to draw strong interest and sometimes multiple offers.