The couple, who have kept their romance largely under wraps, were photographed out and about in New York City on Monday in a rare outing together.
Niall, 24, beat the Big Apple heat in a pair of navy shorts and T-shirt. The One Direction alum accessorized the look with a pair of white sneakers and dark shades, carrying a large water bottle for extra hydration.
Steinfeld, 21, also wore white kicks and sunglasses, but paired those with a green Reformation jumpsuit. The one-piece was cropped with short sleeves and a scoop neckline.
The entertainers sparked romance rumors in February when they were spotted singing and dancing together at a Backstreet Boys show, but a source told PEOPLE at the time the actress was newly single and not ready to jump into a new relationship.
“She’s not actively pursuing anything. Niall is really into her but she’s unsure if she wants to get into something new right away,” said the source.
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The “Slow Hands” singer however, seems to have won her over.
First, the former One Directioner gushed about the star on Instagram for her birthday in December, calling her the “loveliest person on the planet and one of my best friends.”
Then in May, the two were spotted on a low-key date on Sunday at Los Angeles hot spot E.P. & L.P. and showed off some subtle P.D.A
“Niall had his arm around Hailee and they were holding hands,” an onlooker told PEOPLE exclusively. “They definitely looked like a couple.”