Mortgage applications for new-home purchases increased significantly on a year-over-year basis, reflecting the shift toward the new-home market given limited resale inventory. According to the Mortgage Bankers Association Builder Application Survey, mortgage applications increased 35.5% in July 2023 compared with the prior year. Compared to June 2023, applications increased by 0.2%.
“Applications for purchase loans on newly constructed homes remained strong in July, up 36% annually, as new homes continued to account for a growing share of homes available for sale,” says Joel Kan, vice president and deputy chief economist at the MBA. “The FHA share of purchase applications was 24.2%, the highest share since May 2020, and has increased in four of the last five months.”
Kan says FHA purchase loans remain a popular option for first-time buyers. The increasing share of FHA loans suggests more first-time buyers are looking to new homes instead of existing homes due to limited resale inventory.
The average loan size for new homes decreased to $397,148 in July from $400,281 in June.
MBA estimates new single-family home sales ran at a seasonally adjusted annual rate of 677,000 units in July, a 1.5% decrease from the pace of sales in June. On an unadjusted basis, MBA estimates there were 56,000 new-home sales in July, a decrease of 6.7% from 60,000 new-home sales in June. The MBA derives its new-home sales estimate using application information from its survey as well as assumptions regarding market coverage and other factors.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. MBA can provide an early estimate of new-home sales volumes at the national, state, and metro level by using this data in addition to other sources.