Lower Interest Rates Are Re-Energizing Buyer Demand
We’re beginning to see early signs that buyer interest is reawakening as interest rates ease. According to recent industry data, mortgage application submissions increased by approximately 2.5% in December 2025 compared to December 2024, an early indicator that more buyers are stepping back into the market as affordability improves.
Locally, this trend is becoming even more noticeable. Several of my trusted lender partners are reporting a noticeable increase in loan applications this February. While that doesn’t mean we’re heading into a frenzied market overnight, it does suggest that momentum is quietly building.
For buyers who are currently on the fence, it’s worth considering a key reality of the mortgage market: interest rates tend to come down slowly, but rise quickly. Economists estimate that once the national average mortgage rate drops a full percentage point, as many as 5.5 million additional buyers could re-enter the market. That influx doesn’t just increase activity, it increases competition.
What does that mean for buyers who can afford to purchase today, but are waiting for the “perfect” moment? It often means fewer concessions, more multiple-offer situations and less negotiating power once rates fall further.
There’s also a regional factor worth considering. I recently spoke with Alex Massa, the Division President of Appraisal MC. Alex shared an interesting observation specific to the Houston metroplex: rising oil prices historically correlate with increased activity in the real estate market. If we see interest rates settle into the high-4% to low-5% range or oil prices climb, that combination has often preceded a stronger, more competitive Houston housing market.
Right now, we’re sitting at approximately 5.5 months of inventory, which signals a far more balanced market than we’ve seen in several years. Some neighborhoods are still performing exceptionally well with just 1-2 months of inventory, but even those areas offer more opportunity than the one-to-two-week supply conditions we experienced not long ago.
For buyers who value the ability to negotiate and who are open to refinancing at a later date, this window may be worth serious consideration. Some of my trusted lender partners are already able to pre-approve qualified buyers in the low-to-mid 5% range, which is a meaningful shift from where rates were not long ago. If that trend continues, buyer demand is likely to build even faster. If you’ve been sitting on the fence waiting for clarity, this may be the moment to step off and start the conversation sooner rather than later.
We're always happy to walk through the numbers, the neighborhoods, and the strategy so you can move forward confidently, whether now or later.
