Applications for mortgages for new home purchases increased 1% in February compared with January and were up 15.7% compared with February 2023, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
“New home purchase activity in February was slightly hampered by the rise in mortgage rates over the month,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “However, homebuyers kept up their demand despite how competitive the purchase market still is, driving the level of applications to 16 percent ahead of last year’s pace.
“The average loan size increased to its highest level since March 2023 at almost $406,000, but it was still below the record high in MBA’s survey of more than $436,000 in April 2022,” Kan says. “The FHA share of purchase applications, which provides a read on first-time homebuyer activity, increased to 25.7 percent, indicating that first-time buyers continue to turn to new homes due to the lack of affordable existing home options. The estimated sales pace of new home sales was 689,000 units, a slight decline from the previous month.”
The seasonally adjusted annual rate for new home sales in February is a decrease of 1.6% from the January pace of 700,000 units.
On an unadjusted basis, the MBA estimates that there were 62,000 new home sales in February compared with January, a decrease of 1.6%.
By product type, conventional loans composed 63.9% of loan applications, while FHA loans composed 25.7%, RHS/USDA loans composed 0.3% and VA loans composed 10.1%.
The average loan size for a new home in February was $405,719, up from $401,282 in January.
Photo: Alexander Andrews