October New Home Purchase Mortgage Applications Decreased 28.6 Percent

November 17, 2022 Builder Application Survey MBA Research Press Release Residential


Falen Taylor

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The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for October 2022 shows mortgage applications for new home purchases decreased 28.6 percent compared to a year ago. Compared to September 2022, applications decreased by 13 percent. This change does not include any adjustment for typical seasonal patterns.

“New home purchase activity weakened on a monthly and annualized basis in October, as the sharp jump in mortgage rates to nearly 7 percent reduced both overall demand and the purchasing power for many prospective buyers,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The average loan size decreased to $400,616, down 8 percent from its peak in April 2022. The moderation in loan amounts is attributed to slower home-price growth and buyers stepping away from higher-priced homes.”

Added Kan, “MBA’s estimate of new home sales also decreased in October, falling to 598,000 units – the slowest annualized pace since July 2022.”

MBA estimates that new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, were running at a seasonally adjusted annual rate of 598,000 units in October 2022, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. 

The seasonally adjusted estimate for October is a decrease of 6.1 percent from the September pace of 637,000 units. On an unadjusted basis, MBA estimates that there were 47,000 new home sales in October 2022, a decrease of 9.6 percent from 52,000 new home sales in September. 

By product type, conventional loans composed 68.6 percent of loan applications, FHA loans composed 20.1 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 11 percent. The average loan size of new homes decreased from $406,767 in September to $400,616 in October.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application. 

For additional information on MBA’s Builder Application Survey, please click here.