Purchase mortgage applications for newly built homes outperformed in March even as borrowing costs rose sharply in the first month of the Iran war, according to newly released figures from the Mortgage Bankers Association (MBA).
New-home purchase applications were 11% higher last month than a year ago and 26% higher than February, according to the MBA’s Builder Application Survey (BAS), which does not include adjustments for seasonal patterns.
Joel Kan, deputy chief economist at the MBA, said new-home mortgage applications hit their “highest index level since the survey’s inception in 2012” to kick off the spring homebuying season. He tied the growth in new-home sales to buyers’ reactions to rising mortgage rates and economic uncertainty.
“While the index is not adjusted for seasonality, March kicks off the start of spring homebuying season and does typically see an increase in purchase activity,” explained Kan in a statement accompanying the monthly data. “This growth was supported by higher levels of unsold inventory in many markets across the country, some of which were move-in ready and were relatively more appealing to homebuyers who were eager to purchase a home.”
New-home mortgage application volumes had declined 1% from January to land just 0.9% above year-ago levels in February, reflecting the strength of March’s rebound. The average loan size for new homes fell to $381,938 in March from $383,570 in February.
Applications for government-insured mortgages backed by the Federal Housing Administration and Department of Veterans Affairs comprised more than 50% of overall new-home purchase applications for the third consecutive month.
Mortgage rates have not risen as quickly for government loan products compared with conventional mortgages eligible for purchase by Fannie Mae and Freddie Mac, Kan noted. That shift to government loans signals that “affordability remains a focus for many homebuyers.”
The MBA also reported advance estimates of new-home sales in March, which were running at a projected annual sales pace of 717,000 units last month — a nearly 12% jump from the 641,000-unit pace in February. The gains were fueled by a roughly 21% jump in the number of newly built homes sold, from 57,000 in February to an estimated 69,000 in March.
