New-home mortgage applications surged nearly 40% annually in October: MBA

It’s the ninth consecutive month of annual growth as existing homes remain in short supply

Mortgage demand for new homes jumped in October as the inventory for existing homes remained depleted.

Mortgage applications for new-home purchases rose 39.7% in October on a year-over-year basis and were up 6% from the previous month, according to the Mortgage Bankers Association (MBA) Builder Application Survey for October

“Home builders have been able to temper this high-rate environment by offering buyers rate buydowns and other incentives,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “We estimate that the pace of home sales increased for the third straight month to a 715,000-unit annual pace — the strongest sales month since May 2023.”

FHA applications reached highest share of new-home applications since 2013

In October, FHA applications represented 26.3% of all new-home purchase applications as homebuyers turned to new construction for more housing options. This is the highest share of FHA new-home purchase applications in a decade.

Conventional loans made up 63.6% of new-home mortgage applications while VA loans comprised 9.8% of new-home loan applications in October.

The average loan size for new homes was $390,225 in October, down from $397,550 in September

According to MBA estimates, new, single-family home sales were at a seasonally adjusted annual rate of 715,000 units in October. That’s up 12.8% from the September pace of 634,000 units. On an unadjusted basis, MBA estimates that there were 55,000 new-home sales in October 2023, up 7.8% from 51,000 sales in September.

However, higher mortgage rates sank builder confidence again in October, which fell to 40. In September, the sales pace of new homes climbed 12.3% compared to August, reaching a seasonally adjusted annual rate of 759,000. The data for new home sales is scheduled for Nov. 27.

MBA’s survey tracks new-home mortgage application volume from mortgage subsidiaries of homebuilders across the country. 

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