Buyers are getting ‘a leg up’ for the first time in years 

Mortgage rates have stabilized in recent weeks, generating enough interest for some homebuyers to start looking again.

The 30-year fixed-rate mortgage averaged 6.12% this week, according to the latest Freddie Mac survey. That's up from 6.08% a week ago but well below last year's average of 7.49%. The 15-year mortgage rate averaged 5.25%, up from last week's 5.16%.

While rates remain relatively low, Mortgage News Daily has noted an upward trend over the past few days, putting the average 30-year rate at 6.26% for Oct. 3.

The recent rise can be attributed to a number of factors, said Sam Khater, Freddie Mac's chief economist. Along with escalating geopolitical tensions in the Middle East, Khater said the market may have been premature in its enthusiasm on rate cuts as recent data indicates a steady economy. But things are still looking up for buyers.

"Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise," Khater said. "As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year."

Buyers are putting out feelers

Those improved market conditions have led to an increase in open house activity and a small uptick in new mortgage applications. Redfin's homebuying demand index is at its highest level since April as touring activity continues to rise during what would typically be a slower season for home shopping, with the report calling September a "turning point for demand."

The four-week rolling average for pending home sales was flat compared to a year ago — which may not sound like good news, but it's the first time pending sales weren't declining year-over-year since January, according to Redfin. Inventory is also 16.6% higher than a year ago, while new listings are up 4.3%.

Mortgage purchase applications were up 1% from the previous week and are up 9% compared to a year ago, according to the Mortgage Bankers Association. Overall applications were down for the week, however, as refinance activity has started to slow.

"The news for the week was that more homebuyers appear to be entering the market," said Mike Fratantoni, MBA's chief economist.

An uncertain forecast, but positive signs

While some buyers are dipping their toes in, others may still be waiting for rates to come down further this fall, said Lisa Sturtevant, chief economist at Bright MLS. Whether that happens will depend on upcoming economic data on the labor market and inflation. The Federal Reserve doesn't have a meeting scheduled for October, so further interest rate cuts aren't expected until November and December.

While the direction of mortgage rates remains unknown, other aspects of the market are giving potential buyers an edge, said Ralph McLaughlin, senior economist at Realtor.com.

"The good news for homebuyers is that homes are moving slow, inventory is rising, and price cuts are elevated, giving them a leg-up in the market they haven't had in years," McLaughlin said.