Last Updated on November 20, 2023 by Robert C. Hoopes
Mortgage Applications for New Home Purchases Surge, Reflecting Healthy Market Conditions
According to the latest MBA Builder Application Survey, mortgage applications for new home purchases have experienced a remarkable 39.7% increase compared to the same period last year. This surge in applications is indicative of a robust and thriving housing market, suggesting increased confidence among buyers.
The positive trend does not end there, as applications have also seen a notable 6% increase when compared to September 2023. This steady growth signifies the sustained momentum of the market, with more potential homeowners exploring the possibility of purchasing new homes.
In order to further incentivize buyers and alleviate the impact of high interest rates, home builders have been offering rate buydowns and other attractive incentives. These efforts have undoubtedly played a significant role in the increased demand for new homes, as buyers are enticed by the prospect of favorable financing options.
One noteworthy highlight from the survey is the rise in FHA share of applications, reaching a record-high of 26% since the survey began in 2013. This surge indicates a growing number of first-time homebuyers turning to the new home market, possibly drawn by the accessibility and affordability offered by FHA loans.
The MBA also estimates that new single-family home sales were running at a seasonally adjusted annual rate of 715,000 units in October. This figure represents a substantial 12.8% increase from September, further confirming the positive momentum driving the market forward. Additionally, the survey suggests that approximately 55,000 new homes were sold during this period.
Breaking down the types of loans used by buyers, conventional loans accounted for the majority share at 63.6% of applications. FHA loans constituted 26.3%, while RHS/USDA loans made up 0.3%, and VA loans represented 9.8%, respectively. These statistics shed light on the various financing options available to prospective homebuyers, accommodating diverse financial situations.
Finally, data from the survey reveals a slight decrease in the average loan size for new homes, dropping from $397,550 in September to $390,225 in October. This adjustment denotes an effort to cater to buyers’ affordability concerns and create more accessible opportunities for potential homeowners.
It is important to note that while the MBA’s Builder Application Survey provides valuable insights into the market, official estimates of new home sales volumes are conducted by the Census Bureau. Nevertheless, these early estimates offer an encouraging outlook on the state of the housing market, indicating that the industry remains robust and full of growth potential.