Mortgage Applications for New Home Purchases Expand in February

On Friday, the Mortgage Bankers Association (MBA) reported that data from its latest Builder Application Survey (BAS) reveals that mortgage applications for new home purchases increased 1.0% month-over-month and 15.7% year-over-year in February. This change does not include any adjustments for typical seasonal patterns.

According to the MBA, the seasonally adjusted estimate for February is a 1.6% decrease from January’s pace of 700,000 units. On an unadjusted basis, the MBA estimates that there were 62,000 new home sales in February, a decline of 1.6% from the 63,000 new home sales reported in January.

By loan product type, conventional loans comprised 63.9% of loan applications in February; FHA loans comprised 25.7%; RHS/USDA loans comprised 0.3%; and VA loans comprised 10.1%. The average loan size for a new home increased from $401,288 in January to $405,719 in February.

In remarks accompanying the results of the February BAS, MBA Vice President and Deputy Chief Economist Joel Kan said:

“New home purchase activity in February was slightly hampered by the rise in mortgage rates over the month. However, homebuyers kept up their demand despite how competitive the purchase market still is, driving the level of applications to 16% ahead of last year’s pace. The average loan size increased to its highest level since March 2023 at almost $406,000, but it was still below the record high in MBA’s survey of more than $436,000 in April 2022. The FHA share of purchase applications, which provides a read on first-time homebuyer activity, increased to 25.7%, indicating that first-time buyers continue to turn to new homes due to the lack of affordable existing home options. The estimated sales pace of new home sales was 689,000 units, a slight decline from the previous month.”