September New Home Purchase Mortgage Applications Increased 14.9 Percent
October 19, 2023
WASHINGTON, D.C. (October 19, 2023) – The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for September 2023 shows mortgage applications for new home purchases increased 14.9 percent compared from a year ago. Compared to August 2023, applications decreased by 12 percent. This change does not include any adjustment for typical seasonal patterns.
“New home purchase activity weakened in September, as the recent spike in mortgage rates pushed more homebuyers out of the market,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications for new home purchases decreased over the month but were 15 percent higher than a year ago, which is the eighth consecutive month of annual gains. Demand for newly constructed homes remains relatively strong due to the persistent shortage of resale inventory, but increasing mortgage rates are impacting would-be buyers. MBA’s estimate of new home sales dropped to a 634,000-unit pace, the weakest sales pace since October 2022.”
Added Kan, “The FHA share of applications reached 25 percent in September, the highest share in the survey dating back to 2013. This is an indication that demand from first-time homebuyers is still somewhat strong.”
MBA estimates new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 634,000 units in September 2023. 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 September is a decrease of 9.7 percent from the August pace of 702,000 units. On an unadjusted basis, MBA estimates that there were 51,000 new home sales in September 2023, a decrease of 13.6 percent from 59,000 new home sales in August.
By product type, conventional loans composed 65.1 percent of loan applications, FHA loans composed 25.1 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 9.5 percent. The average loan size for new homes decreased from $398,092 in August to $397,550 in September.
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 levels. 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.