The MBA's seasonally adjusted Market Composite Index, a measure of weekly application volume based on surveys of the trade group's members, rose 3.7% for the period ending Feb. 2. The latest increase comes seven days after the index dropped 7.2%, its first decline this year. The latest index still landed 12.9% lower on an annual basis.

But loan volume has managed to head higher four out of the last five weeks, even as interest rates have flattened following their late-2023 plunge. The average contract fixed rate for conforming 30-year mortgages with balances below $766,550 in most markets inched up two basis points to 6.8% from 6.78% in the previous survey, close to its early January mark. Points used to help buy down the rate declined to 0.59 from 0.65 for applications with 80% loan-to-value ratios. 

"Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. However, purchase activity has been strong to start 2024 compared to the final quarter of 2023," said Joel Kan, MBA vice president and deputy chief economist, in a press release.

The seasonally adjusted Purchase Index slipped last week, though, by a seasonally adjusted 0.6% in spite of recent elevated demand, the MBA determined. But activity recovered from the previous week's more-than-11% fall, as conventional mortgages managed to eke out a small increase while government-backed lending slowed. The index was also 18.6% below year-ago levels, coming in weaker primarily due to limited for-sale inventory, Kan added. 

Severe weather earlier in January likely played some role behind some of the recent slowdown in purchases, Redfin said. But early 2024 trends generally reflect sustained home buyer interest, even if it has not resulted in more lending in recent weeks, the online real estate brokerage also noted. Its home buyer demand index, which tracks requests for tours and other services provided by Redfin's agents, was up 6% on a weekly basis toward the end of January. 

Buyer demand is also contributing to an acceleration of purchase-loan sizes, which came in at its highest average in eight months a week ago. In the latest survey period, the mean amount pulled back 2.1% to $434,800, still the second largest total this year, down from $444,100.     

Although also subdued, the MBA's Refinance Index surged 12.3% week-over-week. Seven days earlier, volumes increased by 1.6%, and year over year, the index was flat, up by less than 1%. The refinance share relative to total activity was 35.4% rising from 34.2% in the prior survey period.

Meanwhile, the share of adjustable-rate mortgages slid down to 6.4% of volume from 6.6%.