Mortgage Applications for New-Home Purchases Trend Higher in May

On Thursday, the Mortgage Bankers Association (MBA) reported that data from its May Builder Application Survey (BAS) reveals that mortgage applications for new-home purchases increased 1.0% month-over-month and 13.8% year-over-year. This change does not include any adjustments for typical seasonal patterns.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 702,000 units in May. This is a 0.4% increase from April’s pace of 699,000 units. On an unadjusted basis, MBA estimates that there were 63,000 new home sales—a 1.6% increase from 62,000 new-home sales in April.

By loan product type, conventional loans comprised 63.4% of loan applications in May; FHA loans comprised 26.5%; RHS/USDA loans comprised 0.3%; and VA loans comprised 9.8%. The average loan size for a new home decreased from $405,490 in April to $400,150 in May.

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

“There continues to be strength in the new-home purchase market, as purchase applications increased in May compared to both the prior month and from a year ago. With existing-home inventory still lagging in many markets, many homebuyers have turned their interest toward newly built homes, particularly FHA borrowers. The FHA share of applications was 26.5%, the highest share since the survey high of 27.1% in November 2023. The average loan size was $400,150, a decline from last month’s average of more than $405,000.

MBA’s estimate of new homes show a slight increase to 702,000 units in May, the strongest pace since October 2023.”