Mortgage applications for new home purchases during October were up by 6% from September and up by 39.7% from one year earlier, according to new data from the Mortgage Bankers Association (MBA).
The MBA estimated new single-family home sales were running at a seasonally adjusted annual rate of 715,000 units in October, up 12.8% from the September pace of 634,000 units. On an unadjusted basis, MBA estimated that there were 55,000 new home sales last month, an increase of 7.8% from 51,000 new home sales in September.
The average loan size for new homes decreased from $397,550 in September to $390,225 in October. By product type, conventional loans composed 63.6% of loan applications, FHA loans composed 26.3%, VA loans accounted for 9.8% and RHS/USDA loans made up 0.3%.
“Purchase activity for newly constructed homes continued its upward climb in October with purchase applications up 40 percent compared to a year ago, the ninth consecutive month of annual growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “Home builders have been able to temper this high-rate environment by offering buyers rate buydowns and other incentives. We estimate that the pace of home sales increased for the third straight month to a 715,000-unit annual pace – the strongest sales month since May 2023. The FHA share of applications increased to 26%, the highest share since the survey began in 2013, as more first-time homebuyers turn to the new home market for more options and as some builders start to build more starter homes.”