Applications for mortgages for new home purchases dropped 12% in September compared with August but were up 14.9% compared with September 2022, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
“New home purchase activity weakened in September, as the recent spike in mortgage rates pushed more homebuyers out of the market,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Applications for new home purchases decreased over the month but were 15 percent higher than a year ago, which is the eighth consecutive month of annual gains.
“Demand for newly constructed homes remains relatively strong due to the persistent shortage of resale inventory, but increasing mortgage rates are impacting would-be buyers,” Kan says. “MBA’s estimate of new home sales dropped to a 634,000-unit pace, the weakest sales pace since October 2022.
“The FHA share of applications reached 25 percent in September, the highest share in the survey dating back to 2013,” he adds. “This is an indication that demand from first-time homebuyers is still somewhat strong.”
New single-family home sales were running at a seasonally adjusted annual rate of 634,000 units in September, according to the MBA. That’s a decrease of 9.7% compared with the August pace of 702,000 units.
On an unadjusted basis, MBA estimates that there were 51,000 new home sales in September, a decrease of 13.6% from 59,000 new home sales in August.
By product type, conventional loans composed 65.1% of applications for new home sales, while FHA loans composed 25.1%, RHS/USDA loans composed 0.3% and VA loans composed 9.5%.
The average loan size for a new home in September was $397,550 – down from $398,092 in August.
Photo: Todd Kent