Homebuyers are applying for mortgages on new home purchases at
a notably higher rate than they were a year ago, according to data reported in
the Mortgage Bankers Association’s (MBA) latest Builder Application Survey (BAS).
The survey shows new home purchase applications in October
were up 39.7 percent compared with the same month last year and have increased
6 percent since September, according to a press release. This change does not
include any seasonal adjustments.
MBA’s BAS is a resource used to track application volume
from mortgage subsidiaries of home builders across the country. MBA experts utilize
this data, as well as data from other sources, to calculate an early estimate
of new home sales volumes at the national, state and metro levels. Additionally,
the organization refers to the data to determine the extent to which each type
of loan is being used by new homebuyers.
“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,” MBA Vice President and
Deputy Chief Economist Joel Kan said in the release. “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.”
MBA derives its estimates for new single-family home sales
using mortgage application data recorded in the BAS, combined with assumptions
regarding market coverage, among other factors.
“The FHA share of applications increased to 26 percent, 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,” Kan added.
On an unadjusted basis, MBA estimates there were 55,000 new
home sales in October, representing an increase of 7.8 percent from September,
which saw an estimated 51,000 new home sales.
The survey also breaks down loan data by product type. Conventional
loans composed 63.6 percent of all loan applications, followed by Federal
Housing Administration (FHA) loans (26.3 percent), Rural Housing Service/U.S. Department
of Agriculture (RHS/USDA) loans (0.3 percent) and Veterans Administration (VA)
loans (9.8 percent). The average loan size for new homes dropped from $397,550
in September to $390,225 in October.
The Census Bureau Official provides new home sales estimates
on a monthly basis. New home sales are recorded at contract signing, the
release noted.