Mortgage Applications Surge 20% Nationwide — But Homebuyers Aren’t Rushing In Yet

by John Herkenrath

Why serious buyers are getting pre-approved now, even as pending sales slow

Across the country, mortgage applications for home purchases are up significantly — more than 20% higher than this time last year, according to recent data from the Mortgage Bankers Association (MBA) and the National Association of REALTORS® (NAR).This increase suggests that buyer interest is rebounding. More people are preparing to make a move — but they’re not quite ready to pull the trigger just yet.Even with the rise in applications, pending home sales dipped 0.8% in June, and are down 2.8% from June 2024, showing that many would-be buyers are still sitting on the sidelines.So what’s driving this surge in mortgage activity — and what’s holding buyers back?Let’s break it down.

Inventory is Growing — Offering Buyers More Options

After more than a year of tight supply, the number of homes for sale is finally increasing. Nationally, inventory was up 16% year-over-year in June, giving buyers more choices and slightly more negotiating power.In markets like Southern California, this shift is especially noticeable. Cities across Los Angeles County, Orange County, San Diego, and the Inland Empire are seeing an increase in listings compared to earlier this year — with some sellers motivated by stabilized home values and seasonal momentum.Yet despite improved inventory, buyers aren’t rushing in “Home sales are likely to rise in the second half of the year as more inventory becomes available,” said NAR Chief Economist Lawrence Yun, “but the pace of sales will be determined by the direction of mortgage rates and broader economic conditions.”

Mortgage Rates Remain a Key Factor

One of the biggest barriers to moving forward is mortgage affordability.Rates for a 30-year fixed mortgage have hovered between 6.8% and 7% for weeks. While this is still historically moderate compared to past decades, it’s high enough to affect monthly payment affordability — particularly for first-time buyers or those in high-cost areas.However, there’s a silver lining. Rates have remained stable for over 27 consecutive weeks, giving buyers time to plan without unexpected increases“While it’s hard to see the positive in flat mortgage interest rates for 27 weeks,” said Jessica Lautz, NAR’s Deputy Chief Economist, “at the very least, home buyers can plan, shop, and buy without surprises.”

This predictability, combined with more inventory, is motivating more buyers to get pre-approved now — even if they’re waiting a few months to make an offer.

The Disconnect: Applications Up, Sales Down

So why are mortgage applications up 20% or more, but pending home sales are still falling?This disconnect may point to a rising tide of serious but cautious buyers. Many are preparing now — by meeting with lenders, getting pre-approved, and watching inventory — so they’re ready to act when the conditions are just right.This pattern has shown up multiple times in 2025.

For example:

In April 2025, mortgage applications surged 20% in a single week, with purchase applications up 24% year-over-year, triggered by a small rate dip.
In June, another week of data showed purchase applications 20% higher than the same week in 2024.

These spikes in activity suggest buyers are very rate-sensitive and ready to act as soon as affordability improves — or they find the right home.

Southern California Market Snapshot

In Southern California, buyer activity mirrors many national trends — but with local nuances:

Los Angeles & Orange County: Inventory has improved slightly, especially in the mid-range and luxury markets. Competition is more balanced than in previous years, though prices remain strong in popular neighborhoods.
Inland Empire (Riverside & San Bernardino): New construction is booming, and many buyers are exploring this area for more space and relatively affordable pricing. Builder incentives are helping offset high rates.
San Diego: Homes are staying on the market a bit longer, giving buyers room to negotiate. Still, the area remains competitive due to limited land and steady demand.

Across these regions, more buyers are getting pre-approved now, aiming to strike when either prices soften or rates decline slightly.

What This Means for Buyers and the Market Ahead
If you’re a buyer, the current landscape presents both opportunity and challenge:

Inventory is growing, which means more options.
Rates are stable, giving you time to shop and plan.
Competition is softer than during the 2020–2022 boom, especially in traditionally hot markets.

However, it’s also important to recognize that:

Affordability remains a real concern, particularly in areas like Southern California where prices are already high.
Waiting too long could mean missing out if rates fall and demand picks up again.

For those considering buying this year or early next year, now is the time to get pre-approved, understand your budget, and track neighborhoods closely.

Final Thought

The housing market is shifting. While we're not back to the bidding war frenzy of a few years ago, we’re also not in a full slowdown. Buyers are active behind the scenes — getting pre-approved, watching rates, and preparing to act.If you're considering buying a home in Southern California — or anywhere else — now is the time to get financially prepared, understand the local trends, and stay alert to opportunities.

Need help navigating the current market? Let’s connect. Whether you’re just starting the process or getting ready to make an offer, I’m here to guide you through it.

The SoCal / Arizona Real Estate Report

Mortgage Applications Surge 20% Nationwide — But Homebuyers Aren’t Rushing In Yet

by John Herkenrath

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