Mortgage application volumes for new-home purchases fell for the fifth consecutive month in August, according to the latest Mortgage Bankers Association (MBA) data, as home financing costs climbed.

The MBA’s Builder Application Survey, which tracks application volumes from mortgage subsidiaries of U.S. home builders, registered a 6% decline from July to land 5.5% below year-ago levels in August.

That follows a 5.7% annual decline posted the previous month. It represents only the third month since last October that new-home mortgage applications have posted an annual decrease.

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“Increasing mortgage rates continue to put pressure on new home sales activity,” said Joel Kan, deputy chief economist at the MBA, in a press release accompanying the monthly report.

Survey respondents to the MBA include mostly large builders, which typically account for about 20% of annual new-home sales. The survey does not reflect a growing volume of new-home mortgage applications arising from partnerships between builders and independent mortgage banks.

Kan also noted that new-home purchase applications sank to their lowest level of 2026 in August, deepening a slowdown in new-home sales that has put home builders under pressure for more than a year.

New-home sales were 6% lower than a year ago in July, according to estimates released last month by the U.S. Census Bureau and Department of Housing and Urban Development. The pace of new-home sales in July was the second slowest since late 2022, attributable to persistent affordability challenges hurting buyer demand.

Mortgage rates for typical 30-year homes loans averaged about 6.8% in August, according to MBA data, up from around 6.1% in February and the 6.4% to 6.6% range maintained during May and June.

New-home purchase mortgages often carry below-market rates due to financing incentives that builders have been leaning on heavily over the past year to close deals. But demand nevertheless remained sluggish in August as purchasing power broadly weakened.

On a seasonally adjusted basis, the MBA estimates that the pace of new-home sales accelerated by 2.6% from July to August to reach an annualized rate of 664,000, which is still 9% lower than last year.

However, the MBA also estimates that on an unadjusted basis, the number of new home sales decreased from about 54,000 in July to 52,000 in August, reflecting a decline of about 3.7%. Average loan amounts for new homes fell slightly to $373,194 in August.

As builders continue to confront slow demand, government mortgage programs with lower downpayment thresholds and more flexible qualification criteria have become more popular among new-home buyers, which again was the case in August.

“More homebuyers turned to FHA loans in response to higher mortgage rates and those loans accounted for 35% of applications, the highest share in three months,” said Kan.

Applications for conventional loans that meet the underwriting guidelines of Fannie Mae and Freddie Mac comprised just under half of August application volumes, while application share of Federal Housing Administration loans at 35% rose slightly above prior month levels around 34%.

The Department of Veterans Affairs’ share of new-home applications rose to 13.9% in August from 13.6% in July.