The housing market just saw its biggest inventory spike in nearly 3 years

• New listings for homes for sale climbed 12.9% year-over-year in February, Redfin data shows.
• Total inventory also improved, as total homes for sale did not decline for the first time in nine months.
• Demand remains weak, with mortgage-purchase applications down for four weeks in a row.

The frozen US housing market is showing some signs of loosening this month. 

In the four weeks to February 25, new listings of US homes for sale surged 12.9% compared to the same time a year ago, hitting 79,354, according to data from Redfin. That's the sharpest spike in nearly three years. 

Total inventory, meanwhile, remained flat year-over-year, the first time in nine months the figure didn't move lower.

Redfin's Homebuyer Demand Index, which measures requests for tours and services from Redfin real estate agents, also climbed 10% compared to last month, and is at its highest level since last September. 

"House hunters are out there, and competition picks up every time mortgage rates decline a bit," said Brynn Rea, a Redfin agent in Spokane, Washington. "I'm telling buyers who can afford it to look now while they have more breathing room and less competition. They have a good chance of negotiating the price down or getting some concessions from the seller, which could make up for getting a 7% mortgage rate instead of 6%." 

Mortgage rates are still hovering above 7% and home prices remain high. Mortgage-purchase applications have dropped for four consecutive weeks, and pending sales dipped 8%, the steepest drop in five months.

The median sale price in February hit $365,888 in the four weeks up to February 25 — 5.4% higher than a year ago, and the largest increase since October 2022 except for the four weeks up to February 11.