MBA: October New Home Purchase Mortgage Applications Increased 39.7%

(Image courtesy of MBA)

The Mortgage Bankers Association Builder Application Survey data for October 2023 shows mortgage applications for new home purchases increased 39.7% compared from a year ago. Compared to September 2023, applications increased by 6%. This change does not include any adjustment for typical seasonal patterns.

“Purchase activity for newly constructed homes continued its upward climb in October with purchase applications up 40% 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.”

Added Kan, “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.”

MBA estimates new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 715,000 units in October 2023. 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 seasonally adjusted estimate for October is an increase of 12.8% from the September pace of 634,000 units. On an unadjusted basis, MBA estimates that there were 55,000 new home sales in October 2023, an increase of 7.8% from 51,000 new home sales in September. 

By product type, conventional loans composed 63.6% of loan applications, FHA loans composed 26.3%, RHS/USDA loans composed 0.3% and VA loans composed 9.8%. The average loan size for new homes decreased from $397,550 in September to $390,225 in October.

Image courtesy of MBA

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro levels. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.  

For additional information on MBA’s Builder Application Survey, please click here