New Home Mortgage Applications Declined Month-Over-Month and Year-Over-Year in December

The Mortgage Bankers Association (MBA) reported on Friday (1-19-23) that data from its Builder Application Survey for December revealed mortgage applications for new home purchases decreased 5% month-over-month and 25.2% year-over-year. The changes do not include any adjustment for typical seasonal patterns.

Based on data from the survey, the MBA estimates new single-family home sales were at a seasonally adjusted annual rate of 641,000 units in December—a decrease of 2.9% from the November rate of 660,000 units. On an unadjusted basis, MBA estimates that there were 45,000 new home sales in December, a decrease of 8.2% from 49,000 new home sales in November.

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

“December new home purchase activity—both for applications and estimated sales—ran more than 20 percent behind last year’s pace. The decline in activity was in line with single-family housing starts that were 32 percent lower than a year ago. Higher mortgage rates and a weakening economy held back buyers at the end of the year.

This week’s builder sentiment index from the NAHB reflected an improving outlook and increased buyer traffic as mortgage rates backed off recent highs. The housing market is still in need of more starter and entry-level homes, especially when current demographics trends point to the potential of more younger households to enter homeownership in the near future. New construction of these units will help these buyers entering the housing market.”