Compared with July, mortgage applications for new-home purchases increased by 17% in August, according to unadjusted Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data. Despite the month’s increase, new-home purchases have decreased by 10.1% compared with a year ago.

At a seasonally adjusted annual rate, MBA estimates new single-family homes sales at a pace of 699,000 units in August, based on BAS data. The estimate is derived from mortgage application information from the BAS, market coverage assumptions, and other metrics.

“MBA’s estimate of new-home sales jumped 18% in August, bringing the sales pace to 699,000 units, which is the strongest pace since May 2022. The current sales pace is still 23% lower than the November 2021 peak and is down 20% from last year,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting.

For August, the seasonally adjusted estimate is an increase of 18.3% from the July pace of 591,000 units. MBA estimates that there were 58,000 new-home sales on an unadjusted basis in August, an increase of 16% from 50,000 new-home sales in July.

“New-home purchase applications were down year over year but rebounded in August after four consecutive months of declines, despite higher mortgage rates, declining home builder sentiment, and looming economic uncertainty. The average loan size decreased for the fourth straight month, which is a sign of slowing home-price growth in the new-home market.”

The average loan size of new homes decreased to $415,594 from $416,029 in July. Conventional loans composed 72.1% of loan applications; FHA loans, 17%; RHS/USDA loans, 0.2%; and VA loans, 10.7%.

Kan adds, “Ongoing volatility in mortgage rates in the months ahead may lead to larger swings than is typical in the pace of new-home sales. Between moderating sales prices and volatile mortgage rates, buyers seem to be biding their time.”