Mortgage applications for newly constructed homes showed modest improvement from a year ago in December while declining from the previous month, according to new data from the Mortgage Bankers Association (MBA).
New-home purchase applications rose 2.5% over the year but fell 3% from November. This was partially due to declining share of loans backed by the Federal Housing Administration, which rose to 37% in November but retreated to slightly below 35% last month.
“December purchase activity for newly built homes continued to run stronger than last year, despite cooling slightly from the prior month,” said Joel Kan, deputy economist at the MBA, in a statement accompanying the figures.
The mortgage trade group also released initial estimates of seasonally adjusted new-home sales, though the U.S. Census Bureau has only reported official figures since October because of reporting lags caused by the federal government shutdown.
The Census Bureau said earlier this week that the annualized pace of new-home sales was flat on a monthly basis in October at around 737,000 units. The bureau has not announced when it will release updated figures for November.
MBA data indicates that the pace of new-home sales slowed to around 640,000 units in December, a 15% plummet from the association’s previously reported estimates for November, but still 6.7% higher year over year.
There were 50,000 new-home sales in December compared to 51,000 in November, a decline of 2%. MBA derives these estimates, in advance of official government statistics, using mortgage application data from its Builder Application Survey, “as well as assumptions regarding market coverage and other factors.”
“In our latest forecast,” Kan added, “we expect new home sales in 2026 will increase gradually as mortgage rates stay close to current levels and sales price growth remains muted,” on account of builders’ excess inventory.
Home builders have reported aggressive use of incentives — and plans to continue strong use of incentives this year — to part with a growing backlog of completed homes, slowing their pace of starts due to lackluster demand.
