Homebuyer Demand Hit Highest Level in 3 Months: Report

Housing starts jumped by more than 11 percent on a monthly basis in February, suggesting robust construction activity.

A home for sale in Austin, Texas, on May 22, 2024. Brandon Bell/Getty Images

Prospective buyers are warming up to the housing market, which could lead to more sales if mortgage rates drop, according to real estate brokerage Redfin.

“Homebuyer Demand Index—a seasonally adjusted measure of home tours and other buying services from Redfin agents—hit its highest level in three months,” as of the week ending March 16, the company said in a March 20 statement. It was up by 5 percent year over year. Home tours are “rising faster this year than in 2024.”

“Rising demand could translate into an improvement in pending sales in the coming months, especially if mortgage rates decline more. Rates could decline if inflation eases and we see stronger evidence of weak economic data that point toward a recession.”

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The average weekly rate for a 30-year fixed-rate mortgage has declined after hitting a peak of 7.04 percent in mid-January, according to Freddie Mac. While rates have risen slightly over the past two weeks, the increase was only marginal, rising from 6.63 to 6.67 percent.

Sam Khater, chief economist at Freddie Mac, said that the 30-year rate has remained below the 7 percent level for nine straight weeks, which is “helpful for potential buyers and sellers alike.”

He sees the combination of lower mortgage rates and improving inventory as a positive signal for prospective buyers during the spring homebuying season.

Signs of improved inventory include a 5.5 percent year-over-year increase in new listings, which is the largest increase in six weeks, and an 11 percent jump in active listings.

For the four weeks ending March 16, there were 4.1 months of supply in the housing market, suggesting that the market is in a balanced state and not in favor of sellers.

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Heather Mahmood-Corley, a Redfin Premier agent in Phoenix, said that some buyers and sellers are still waiting for rates to move lower before making commitments.

Some are “holding off because they’re worried about the economy and losing their job. But others are jumping back in because it’s clear the market isn’t going back to where it was in 2020,” she said.

“Overall, it feels more like a buyer’s market than a seller’s market. I’m telling sellers their home needs to look like a model house, and it probably needs to be priced lower than they think. Even though costs are high, it’s not a bad time to buy: For listings that sit on the market a long time, many buyers are able to successfully negotiate.”

Housing Starts, Opening Up Federal Lands

Encouraging signs for the housing market were seen in the recent construction data for February released by the U.S. Census Bureau.

Overall housing starts rose by 11.2 percent in February from a month back. Out of the four regions, three—Northeast, South, and West—registered a monthly increase.

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Single-family housing starts increased by 11.4 percent month over month. This was the “highest pace since February 2024,” according to a March 18 statement from the National Association of Home Builders (NAHB).

A lack of existing inventory in the single-family housing market contributed to boosting production last month, said Buddy Hughes, chairman of the association.

Jing Fu, NAHB’s senior director of forecasting and analysis, said that while uncertainty over tariffs has a negative effect on single-family starts, “prospects of a better regulatory business climate” are expected to offset this negativity.

As a result, single-family starts are expected to remain effectively flat this year, he said.

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“Meanwhile, multifamily construction is expected to remain soft in early 2025 due to challenging financing conditions, before stabilizing in the second half of the year,” he said.

The Trump administration has announced plans to ensure Americans have access to affordable housing.

Last week, Interior Secretary Doug Burgum and Housing and Urban Development Secretary Scott Turner announced a partnership between their agencies to identify and open underutilized federal land to help address the housing shortage.

“We need 7 million affordable homes in America and 20 percent of America’s landmass is owned by the Department of Interior,” Turner said in a March 17 post on social media platform X.

In a video announcing the partnership, Burgum said the initiative “will identify underutilized federal lands suitable for residential development and streamline the land transfer process.”

“It will also promote policies to increase the availability of affordable housing while balancing important environmental and land use considerations,” he said.