Mortgage applications for new homes dipped in September from the previous month but remained higher than last year’s levels, according to the Mortgage Bankers Association (MBA)’s Builder Application Survey released Thursday.
The data offers a snapshot of housing demand at a time when market watchers are seeking clues about new-home sales amid the federal government shutdown and delays in the U.S. Census Bureau’s data releases.
Applications for new homes rose 2% from a year earlier but declined 5% from August, reflecting typical seasonal slowdowns. The figures are not adjusted for seasonal patterns.
“Despite more inventory, builder incentives, and lower mortgage rates, near-term demand is slowing as the labor market weakens,” Joel Kan, MBA’s vice president and deputy chief economist, said a statement.
Conventional loans continued to dominate, accounting for 52.5% of applications, followed by Federal Housing Administration (FHA) loans (33.8%), U.S. Department of Veterans Affairs (VA) loans (12.6%) and U.S. Department of Agriculture (USDA) loans (1%). The average loan size for new homes increased to $379,107 in September, up from $374,288 in August.
Launched in 2023, the MBA’s Builder Application Survey tracks loan application activity from lenders working with homebuilders to finance new single-family homes. The data is used to estimate new-home sales based on market coverage and other factors.
“MBA’s estimate of new home sales for September showed a 7% decline to an annual pace of 680,000 units after reaching a 10-month high in August,” Kan said. The seasonally adjusted estimate compares with an August pace of 730,000 units.”
Despite the monthly slowdown, homebuilders are feeling more optimistic. Overall, their confidence rose five points in October, compared to September, to a reading of 37, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.