September New Home Purchase Mortgage Applications Down 16.2%

Mortgage applications for new home purchases decreased 16.2 percent from a year ago, the Mortgage Bankers Association reported Tuesday in its September Builder Applications Survey. From August, applications decreased by 4 percent.

By product type, conventional loans composed75.1 percent of loan applications, FHA loans composed 13.9 percent, RHS/USDA loans composed 0.5 percent and VA loans composed 10.5 percent. The average loan size of new homes increased from $406,922 in August to $408,522 in September.

Changes do not include any adjustment for typical seasonal patterns.

“New home sales purchase activity was weaker in September, and the average loan size rose to another record high, as homebuilders continue to grapple with rising building materials costs and labor shortages,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.

Kan noted the survey-high average loan size of $408,522 is evidence of higher sales prices from these higher costs, “as well as the shift in new construction to larger, more expensive homes.” He said the estimated pace of new home sales decreased 3.5% last month after a strong August reading, but the two-month sales pace is at its strongest since January 2021.

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 843,000 units in September, based on data from the BAS, a decrease of 3.5 percent from the August pace of 874,000 units. On an unadjusted basis, MBA estimated 66,000 new home sales in September, a decrease of 7 percent from 71,000 new home sales in August. 

The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. 

The MBA Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country.  Using these data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state and metro level. Data also provide information on types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In those data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.