Applications for mortgages for new home purchases increased 3% in October compared with September and were up 8.2% compared with September 2023, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS).
“New home purchase activity picked up in October even as stronger economic data and election uncertainty pushed mortgage rates higher over the course of the month,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Both new applications and estimated home sales were higher compared to year-ago levels.”
“New homes are an attractive alternative for many buyers as existing inventory is still tight in many markets around the country and a newly constructed home provides additional customization options,” Kan says. “The average loan size picked up to almost $410,000, the highest in the survey since August 2022. However, the FHA share remains elevated at almost 29 percent, driven by a high share of first-time home buyers still active in this segment of the market.”
Sales of new single-family homes were running at a seasonally adjusted annual rate of 747,000 units in October, the MBA estimates. That’s an increase of 9.9% from September.
On an unadjusted basis, MBA estimates that there were 56,000 new home sales in October, an increase of 3.7 percent from 54,000 new home sales in September.
By product type, conventional loans composed 60.8% of applications for new home sales, FHA loans composed 28.7%, RHS/USDA loans composed 0.4% and VA loans composed 10.1%.
The average loan size for a new home was $409,942, up from $402,658 in September.
Photo: Todd Kent