The MBA's Market Composite Index, a measure of application activity based on surveys of the trade group's members, rose a seasonally adjusted 7.1% for the seven days ending March 8. A week earlier, it jumped 9.7% after a month-long slide. On a year-over-year basis, though, current levels still ran 6.1% lower. 

Fixed interest rates decreased across the board among association lenders, driving borrower interest, particularly in the refinance market, the MBA said. The average fixed-contract rate for the 30-year conforming mortgage with balance below $766,550 in most markets fell back under the 7% mark, landing at 6.84%. A week earlier, the average came in at 7.02%. Points to buy down the rate decreased 2 basis points to 0.65 from 0.67 for 80% loan-to-value ratio mortgages.

Rates dipped after February's jobs data showed a less robust market in previous months than originally reported, said Mike Fratatoni, MBA's senior vice president and chief economist. The downward trend boosted the Refinance Index 12.2%, with government-backed transactions leaping 23.6% week over week. Compared to the same survey period in 2023, the index was up 4.7%. 

"While these percentage increases are large, the level of refinance activity remains quite low," Fratantoni said in a press release. "We expect that most of this activity reflects borrowers who took out a loan at or near the peak of rates in the past two years."

The surge in refinances helped them garner a 31.6% share relative to total volume, increasing from 30.2% seven days earlier. Elevated activity also came after the MBA reported growth in refinance products offered by lenders last month.

At the same time, the MBA's seasonally adjusted Purchase Index saw a 4.7% week-over-week rise. But volumes fell 10.8% annually, with limited inventory and high housing costs suppressing activity. 

Still, some relief may be on the way this spring based on the pace of new listings coming to market, according to Redfin. New listings over the previous four weeks grew by their largest in almost three years, according to the real estate brokerage's data. At the same time, the total number of home listings increased annually for the first time in nine months, inching up 1.7%.

"Buyers who can afford today's mortgage rates may have better luck finding a home now than they have in the past several months, and they also may be less likely to face competition because inventory is improving," said Chen Zhao, Redfin economic research lead.

But competition for the limited supply of homes currently on the market may also be driving up prices, when the average purchase-loan amount reported by the MBA are taken into account. The mean size jumped up to its highest value in over a year to $444,300, edging up from $442,500 in the prior weekly survey.

The percentage of federally sponsored applications saw only a small rate of growth, despite the surge in refinances, as purchases in the government market slowed. Mortgages guaranteed by the Federal Housing Administration dropped to 12% of activity compared to 12.7% a week earlier. The decrease was offset by a rise in loans from the Department of Veterans Affairs to 12.2% from 11.4%. Applications coming through the U.S. Department of Agriculture remained at the same 0.5% weekly share.