New homes sold at their quickest monthly pace in a year in October, though purchase mortgage applications declined by 2.6%, according to new figures from the Mortgage Bankers Association (MBA).

The jump in annual sales pace to a seasonally adjusted 771,000 units was driven by continued use of builder concessions and increased use of adjustable-rate mortgages (ARMs), which accounted for 25% of new-home purchase applications in October, up from 16% a year ago.

October’s new-home sales pace represents a 13.4% increase from September, when the MBA reported a 7% decline in new-home sales to an annual pace of 680,000 units.

Joel Kan, deputy chief economist at the MBA, noted that mortgage rates for ARM loans averaged 80 basis points lower than fixed-rate loans. Increased new-home inventory also contributed to the rise, Kan stated in a press release.

Separately, a spokesperson for the MBA confirmed to Scotsman Guide that a higher volume of cash sales explains the difference between higher October new-home sales but lower October new-home purchase applications.

U.S. homebuilders have watched slowing sales lead to bloated inventory over the course of 2025 after years of accelerated construction during and after the COVID-19 pandemic.

Weakening labor markets and plummeting consumer sentiment since April has induced caution among active homebuyers already facing severe affordability challenges.

Meanwhile, softening home prices driven by expanding for-sale inventories of existing homes has eroded the affordability edge new homes enjoyed in recent years, increasing cross-competition for sales.

The U.S. Census Bureau typically reports new-home sales monthly but has not released updated figures for September due to the longest government shutdown in U.S. history, which ended Nov. 12 after 43 days.

Updated September sales figures from the Census Bureau would also include any revisions to August totals, which the government had initially reported rising more than 20% to an annual pace of 800,000 units, a 10-month high.

On an unadjusted basis, the MBA estimates 55,000 new homes were sold in October, a 1.9% rise from September. The average loan size for new homes rose to $381,404 last month from $379,107 in September.

The MBA says its new-home sales estimate is derived using information from the association’s Builder Application Survey — which measures monthly mortgage application volumes from homebuilders’ mortgage subsidiaries — as well as “assumptions regarding market coverage and other factors.”