After a Labor Day week lull, demand for mortgages rose sharply last week from homeowners and homebuyers.

Total mortgage application volume was up nearly 5% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Mortgage interest rates, however, didn’t move, and haven’t for the past four weeks. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) remained unchanged at 3.03%, with points decreasing to 0.30 from 0.32 (including the origination fee) for loans with a 20% down payment.

Applications for a loan to purchase a home rose 2% for the week but were still 13% lower than one year ago. That annual comparison, however, is shrinking. Homebuyers really pulled back over the summer, as soaring prices and record low supply made for a toxic mix. Purchase demand last week was the highest since April.

“Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory. The inventory situation is improving, with more new homes under construction and more homeowners listing their home for sale,” said Joel Kan, an MBA economist.

Applications to refinance a home loan increased 7% for the week but were 5% lower than a year ago.  

“This week’s refinance gain was driven heavily by an increase in FHA and VA applications,” Kan said.

Those are low down-payment loans offered by the federal government and tend to be favored by lower-income or first-time homebuyers.

Mortgage applications to purchase a newly built home rose unexpectedly in August, according to another report from the MBA. They usually drop in August due to seasonality, but demand appears to be coming back despite still strong price gains.