Mortgage purchase applications for newly constructed homes declined measurably in August compared to the previous month but increased slightly from a year ago.
The Builder Application Survey published by the Mortgage Bankers Association (MBA) showed the volume of purchase applications in August for newly constructed homes fell 6% from July, unadjusted for seasonal purchasing patterns. Volumes were 1% higher than August 2024.
In a press release, the MBA noted that rising for-sale inventory has increased options for prospective homebuyers, reducing sales price pressures.
“The bright spot in the August results was that estimated new home sales increased for the third consecutive month to its strongest sales pace in almost a year,” noted Joel Kan, vice president and deputy chief economist at the MBA.
Overall mortgage applications have improved in recent weeks as mortgages rates have declined to 11-month lows. Combined with softening home prices, easing mortgage rates have led to slight improvements in homebuying affordability.
The MBA estimates that new single-family home sales ran at a seasonally adjusted pace of 730,000 in August, an increase of 6.6% from the 685,000-unit pace in July.
On an unadjusted basis, however, the MBA estimates that there were 2,000 fewer new-home sales in August than July, a 3.4% decline from 58,000 to 56,000 units.
In August, conventional loans comprised 49.9% of new-home purchase applications, while loans backed by the Federal Housing Administration made up 35.6%. The average loan size for new homes increased from $372,745 to $374,288, “close to 2021 levels,” Kan added.
