Mortgage Applications for New Home Purchases Up Year-Over-Year but Down Month-Over-Month in September

The Mortgage Bankers Association (MBA) reported on Thursday (10-19-23) that data from its September Builder Application Survey reveal mortgage applications for new home purchases declined 12.0% month-over-month but were up 14.9% year-over-year. This change does not include any adjustments for typical seasonal patterns.

According to the MBA, the seasonally adjusted estimate for September decreased 9.7% from August’s pace of 702,000 units. On an unadjusted basis, the MBA estimates that there were 51,000 new home sales in September, a decline of 13.6% from 59,000 new home sales in August.

By loan product type, conventional loans comprised 65.1% of loan applications in September. FHA loans comprised 25.1%, RHS/USDA loans 0.3%, and VA loans 9.5%. The average loan size for a new home decreased from $398,092 in August to $397,550 in September.

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

“New home purchase activity weakened in September, as the recent spike in mortgage rates pushed more homebuyers out of the market. Applications for new home purchases decreased over the month but were 15% higher than a year ago, which is the eighth consecutive month of annual gains. Demand for newly constructed homes remains relatively strong due to the persistent shortage of resale inventory, but increasing mortgage rates are impacting would-be buyers. MBA’s estimate of new home sales dropped to a 634,000-unit pace, the weakest sales pace since October 2022.

The FHA share of applications reached 25% in September, the highest share in the survey dating back to 2013. This is an indication that demand from first-time homebuyers is still somewhat strong.”