Mortgage applications for the purchase of newly built homes declined 5% in September from the month prior, though they rose 2% on an annual basis.

The late-summer decline reflected “typical seasonal patterns” said Joel Kan, deputy chief economist at the Mortgage Bankers Association (MBA), commenting on newly released MBA Builder Application Survey data. However, Kan also noted macroeconomic forces dampening new-home activity.

“Despite more inventory, builder incentives and lower mortgage rates,” Kan explained, “near-term demand is slowing as the labor market weakens.”

Conventional loans comprised 52.5% of new-home purchase applications in September, while loans backed by the Federal Housing Administration accounted for 33.8%.

Loans backed by the U.S. Department of Agriculture made up 1% of new-home purchase activity, while loans backed by the Department of Veterans Affairs comprised 12.6%.

The extent to which September new-home purchase applications translated into September new-home sales has acquired a degree of uncertainty due to the government shutdown — and subsequent suspension of data collection operations — that began Oct. 1.

The U.S. Census Bureau’s scheduled release of new residential construction activity on Oct. 17 and new residential homes sales data on Oct. 24 have been delayed. The MBA sought to address that reporting gap in its release of September new-home sales estimates alongside the monthly purchase application data.

“MBA’s estimate of new home sales for September showed a 7% decline to an annual pace of 680,000 units after reaching a 10-month high in August,” said Kan, describing the estimate as “a leading indicator of the direction of the new home sales market for September” in the absence of official Census Bureau data.

The Census Bureau reported at the end of September that August new-home sales surged 20.5% from July and 15.4% from the year before, boosted by builder sales incentives like mortgage rate buydowns and price cuts.

Thursday’s release of homebuilder sentiment from the National Association of Home Builders showed a marked improvement in builder’s six-month outlook for sales. Builders reported continued use of aggressive incentive strategies to motivate hesitant buyers.

Still, the delay in the Census Bureau’s September new-home construction and sales data includes any potential revisions to August’s surprisingly robust activity.

The MBA’s seasonally adjusted estimate for September new-home sales is a 6.8% decrease from August’s annualized pace of 730,000 units. On an unadjusted basis, MBA counted 54,000 new-home sales in September, a 3.6% drop from the 56,000 mark in August.

The MBA reports that the average loan size for new homes rose from $374,288 in August to $379,107 — a roughly 1.3% increase — in September.