Purchase Applications increased modestly last week as some buyers returned to the housing market despite elevated mortgage rates and ongoing economic uncertainty. While the latest lending data points to improving buyer activity, industry analysts say the broader housing market remains under pressure from inflation concerns, geopolitical instability, and slower-than-expected spring sales momentum.

New figures released by the Mortgage Bankers Association showed that the adjusted Market Composite Index, which measures overall mortgage loan application volume, rose 1.7% during the latest reporting period. The increase followed the previous week’s decline and offered a small sign of stabilization after months of uneven housing activity.

The report showed that Purchase Applications moved higher even as borrowing costs continued to rise. Adjusted and unadjusted purchase applications both increased by 4% week over week and climbed 7% compared to the same period last year. However, the average 30-year fixed mortgage rate rose to 6.46%, marking the highest level recorded in five weeks.

Analysts believe some homebuyers are taking advantage of improving negotiating conditions in select markets. Housing inventory has gradually increased in many parts of the country, creating more options for buyers who spent the past several years dealing with limited supply and intense competition. New property listings also surpassed home sales for the first time this year, signaling a potential shift toward a more balanced market.

At the same time, refinance activity continued to weaken. Refinancing applications declined 1% from the previous week and accounted for 40.8% of total mortgage applications. According to MBA Vice President and Deputy Chief Economist Joel Kan, the decline was driven largely by weaker conventional and VA refinance demand.

Although Purchase Applications have improved modestly, broader market indicators continue to show a slower spring housing season than many industry participants originally expected. Existing-home sales rose only 0.2% last month, falling below economist forecasts and reflecting continued caution among buyers facing higher financing costs.

Economic uncertainty has also added new pressure to the housing sector. Financial markets have reacted to geopolitical tensions in the Middle East, particularly the ongoing conflict involving Iran, which has contributed to higher oil prices and renewed inflation concerns. Rising energy costs have complicated the outlook for mortgage rates and consumer confidence.

Chief economist Lawrence Yun of the National Association of Realtors recently stated that the current spring housing season has not yet shown signs of meaningful annual growth. According to Yun, housing activity through April remained largely flat compared to the same period one year earlier.

Major real estate and mortgage companies are also watching the slowdown closely. During a recent earnings call, Varun Krishna, chief executive of Rocket Companies and interim CEO of Redfin , acknowledged that second-quarter housing activity has not accelerated as expected based on the company’s early internal data.

Krishna explained that rising oil prices and inflationary pressure have contributed to higher mortgage rates, changing the company’s outlook for the second quarter. However, executives at Rocket continue to emphasize long-term investment in technology and customer acquisition despite ongoing market challenges.

Industry professionals say the housing market is now entering a more selective phase where affordability, financing flexibility, and inventory conditions will play a greater role in buyer decision-making. Markets with stronger inventory growth and more stable pricing could see improved transaction activity during the second half of the year.

Meanwhile, affordability challenges continue to limit broader housing demand. Many prospective buyers remain sensitive to mortgage rate fluctuations, especially first-time purchasers already facing elevated home prices and rising insurance costs. Even modest increases in rates can significantly affect monthly payments and overall purchasing power.

Despite these headwinds, some analysts believe the recent increase in Purchase Applications may indicate that buyers are gradually adjusting to higher-rate conditions after delaying purchases for several years. The so-called “wait-and-see” approach that dominated much of the post-pandemic housing cycle may slowly be fading as households prioritize life changes, relocations, and long-term housing needs.

For lenders, brokers, and real estate firms, the coming months will likely determine whether the current market stabilizes or continues to slow under the weight of economic uncertainty. Much will depend on inflation trends, Federal Reserve policy signals, and geopolitical developments affecting consumer sentiment and borrowing costs.

Although the housing market remains far below the activity levels seen during the pandemic-era boom, the latest mortgage data suggests cautious demand is still present. If inventory continues to improve and rates stabilize, Purchase Applications could gradually strengthen heading into the latter part of 2026.