The residential market got some encouraging news this week from Optimal Blue’s April 2024 Originations Market Monitor report, which revealed that the count of purchase mortgage locks rose for the first time in more than two years.

More specifically, purchase locks rose by 5% year over year, the first such uptick since the Federal Reserve began its rate-hiking cycle in March 2022.

“Purchase lock counts are a key market indicator as they control for changes in home prices and more volatile refi activity, so the year-over-year increase in April is a particularly encouraging sign that mortgage production may be turning a corner,” said Brennan O’Connell, director of data solutions at Optimal Blue. “While we are cautiously optimistic, May figures will provide further confidence in the positive trend, as April 2024 numbers got a boost from the Easter holiday landing in March this year.”

Monthly rate lock volume also picked up, boosted by spring homebuying. An 11% climb in purchase lock volume from March drove a total rate lock volume increase of 8.7% month over month in April. On the other hand, cash-out volume was flat month to month and rate-and-term refinance volume dropped by 13.7%, bringing the refi share of total lock volume down to 12% — on par with the lows posted during summer last year.

Purchase locks rose in April despite the affordability woes that have persistently plagued the market for months. Rising home prices were reflected in average loan amounts during April: $374,500, up from $367,300 one month prior. Affordability issues also partially account for shifts in loan type trends in April, with shares for nonconforming loan products, including jumbo loans (used by more affluent buyers who can weather low affordability), up to 13.7% from 11.8% one month prior. Conversely, shares for FHA loans, often utilized by affordability-dependent first-time buyers, are down to 18.4% in April from 19.0% in March.