Applications for mortgages for new home purchases increased 1% in March compared with February and were up 6.2% compared with March 2023, according to the Mortgage Bankers Association (MBA).
“March is typically a month when new home purchases see a seasonal boost, but this year March applications for new home purchases saw less than a one percent increase over the prior month on an unadjusted basis,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Applications were still ahead of last year’s pace, but at 6 percent, the annual growth rate was the slowest since September 2023.”
“Homebuyers remain adversely impacted by strong home-price growth and mortgage rates hovering around 7 percent,” Kan says. “The FHA share of applications did increase in March, exceeding 26 percent, compared to a 24 percent average for the prior 12 months. A higher FHA share can be a sign of more first-time buyer activity, but that segment of buyers is also more sensitive to affordability challenges.”
“MBA’s estimate of new home sales fell more than 10 percent over the month to a seasonally adjusted pace of 615,000 units, the slowest annual pace in four months,” he adds.
New single-family home sales were at a seasonally adjusted annual rate of 615,000 units in March, a decrease of 10.7% compared with February, the MBA estimates.
On an unadjusted basis, the MBA estimates that there were 60,000 new home sales in March, a decrease of 3.2% from 62,000 in February.
By product type, conventional loans composed 63.0% of applications for new home purchases, while FHA loans composed 26.4%, RHS/USDA loans composed 0.3% and VA loans composed 10.4%.
The average loan size for a new home was $405,400 in March, down from $405,719 in February.
Photo: Alexander Andrews