Mortgage Applications for New Home Purchases Increase in August

The Mortgage Bankers Association (MBA) reported on Thursday (9-14-23) that data from its August Builder Application Survey (BAS) reveal mortgage applications for new home purchases increased 4.0% month-over-month and 20.6% year-over-year. This change does not include any adjustments for typical seasonal patterns.

According to the MBA, the seasonally adjusted estimate for August increased 3.7% from July’s pace of 677,000 units. On an unadjusted basis, the MBA estimates that there were 59,000 new home sales in August, an increase of 5.4% from 56,000 new home sales reported in July.

By loan product type, conventional loans comprised 65.8% of loan applications in August. FHA loads comprised 23.8%, RHS/USDA loans 0.2%, and VA loans 10.2%. The average loan size for a new home increased from $397,148 in July to $398,092 in August.

Adding additional background and his analysis to the report, MBA Vice President and Deputy Chief Economist Joel Kan said:

“There was strong purchase demand in August for newly constructed homes, as existing for-sale inventory remains low with most homeowners locked into lower mortgage rates and unwilling to give those rates up in this higher rate market. Despite the 30-year fixed rate averaging over 7% in August, applications for new home purchase loans increased over the month and from a year ago.”

The FHA share of applications dipped slightly in August but remains close to survey highs, indicating that a larger share of first-time homebuyers is supporting the new home sales market. Our estimate of new home sales showed a 4% increase to the strongest pace of sales in three months at 702,000 units.”