Mortgage Applications for New Home Purchases Move Higher in March

On Tuesday, the Mortgage Bankers Association (MBA) reported that data from its March Builder Application Survey (BAS) reveals that mortgage applications for new home purchases increased 1.0% month-over-month and 6.2% year-over-year. This change does not include any adjustments for typical seasonal patterns.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 615,000 units in March. That’s a 10.7% decrease from February’s pace of 689,000 units. On an unadjusted basis, the MBA estimates that there were 60,000 new home sales in March, a decline of 3.2% from 62,000 sales in February.

By loan product type, conventional loans comprised 63.0% of loan applications in March; FHA loans comprised 26.4%; RHS/USDA loans comprised 0.3%; and VA loans comprised 10.4%. The average loan size for a new home decreased from $405,719 in February to $405,400 in March.

Adding background and analysis to the BAS results, MBA Vice President and Deputy Chief Economist Joel Kan said:

“March is typically a month when new home purchases see a seasonal boost, but this year March applications for new home purchases saw less than a 1% increase over the prior month on an unadjusted basis. Applications were still ahead of last year’s pace, but at 6%, the annual growth rate was the slowest since September 2023. Homebuyers remain adversely impacted by strong home-price growth and mortgage rates hovering around 7%. The FHA share of applications did increase in March, exceeding 26%, compared to a 24% average for the prior 12 months. A higher FHA share can be a sign of more first-time buyer activity, but that segment of buyers is also more sensitive to affordability challenges.

MBA’s estimate of new home sales fell more than 10% over the month to a seasonally adjusted pace of 615,000 units, the slowest annual pace in four months.”