The MBA's Market Composite Index, a measure of weekly application volumes based on surveys of the trade group members, jumped up a seasonally adjusted 9.7% for the period ending March 1. The first upturn since early February follows a 5.6% decline seven days earlier. On a year-over-year basis, activity was also 6.6% lower.

Declining interest rates, although minimal, brought borrowers back unlike the previous week despite similar flattening, according to Michael Fratontoni, MBA senior vice president and chief economist.

The average 30-year fixed contract rate for mortgages with conforming balances of $766,550 in most markets inched down 2 basis points to 7.02% from 7.04%. Points used to buy down the rate remained at 0.67 week over week for 80% loan-to-value ratio applications. 

"The latest data on inflation was not markedly better nor worse than expected, which was enough to bring mortgage rates down a bit," Fratantoni said in a press release. "Mortgage applications were up considerably relative to the prior week, which included the President's Day holiday."

Both purchases and refinances saw volumes rise. The MBA's Purchase Index surged a seasonally adjusted 10.6% compared to one week earlier. Volumes, though, remained 8.6% below year-ago levels, with supply levels and affordability concerns contributing to a sluggish housing market. 

Of particular note was growing interest in loans backed by the Federal Housing Administration, Fratantoni added. "Purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time home buyer segment is to relatively small changes in the direction of rates."

But even with the growth in government-sponsored applications typically used for affordably priced properties, the average purchase-loan size still grew to $442,500, due to both elevated conventional activity and ongoing limited inventory. The mean amount was the second-highest mark this year, climbing higher by 2.9% from the prior survey's average of $430,000. 

With the onset of spring buying season, many in the industry are looking for signs of business growth to hold following an up-and-down start to 2024. Online real estate brokerage Redfin reported last week the biggest annual rise in new listings in almost three years and also saw demand for tours and other services it offers trending upward in February. 

New-listing trends represent "a real positive for the spring buying season given the lack of for-sale inventory," Fratantoni said.

But greater consumer interest has not led to a similar rise in purchase activity yet. Earlier this week, brokerage Housecanary also issued its February report and determined the number of net new listings and contract volume down by 10.6% and 2.2% from 12 months earlier. 

Meanwhile, the MBA's Refinance Index picked up momentum with an 8.1% week-over-week gain. But the index reading was also 3.8% lower than where it stood during the same period last year. At the same time, the share of refinances relative to total activity shrank to 30.2% from 31.1% the previous week. 

Despite the growth in FHA and other government-backed volumes, the share of federally sponsored applications decreased on a weekly basis due to an even larger surge in conventional lending. 

The share of FHA-guaranteed applications declined to 12.7% from 13% the previous week, while the slice sponsored by the Department of Veterans Affairs decreased to 11.4% from 11.7%. Loan-applications backed by the U.S. Department of Agriculture accounted for the same 0.5% share.