The Mortgage Bankers Association's (MBA) Builder Application Survey (BAS) data for August 2024 shows mortgage applications for new home purchases increased 4.4% compared to a year ago, while remaining unchanged from the previous month.
After pending home sales hit a 23-year low in July, dropping 5.8% from July 2023, the late-summer bump in purchase applications for new homes signals that reduced borrowing costs should draw hesitant buyers off the sideline. Compared to the first seven months of 2023, new-home sales were up 2.6% from January through July of 2024.
“Homebuyers, including a growing share of first-time buyers, continue to favor newly built homes, as declining mortgage rates in August contributed to the uptick in new home sales activity," said MBA’s Vice President and Deputy Chief Economist Joel Kan. “Applications for new home purchases continue to show year-over-year growth, increasing by more than 4% and extending the annual growth streak to 19 consecutive months.”
The MBA estimates that new single-family home sales, a reliable predictor of the U.S. Census Bureau's New Residential Sales report, reached a seasonally adjusted annual rate of 776,000 units in August 2024. This figure is based on mortgage application data from the BAS and incorporates market coverage assumptions and other factors.
New-home sales have been a bright spot for buyers over the past two years as affordability has plummeted amidst high homes prices and borrowing costs, and supply has remained at historic lows. Mortgage experts say there is still-strong demand for newly constructed homes.
"The FHA share of purchase applications reached another record high in the survey at 29.6%," Kan continued. "Estimated new home sales increased almost 15% over the month, reaching the fastest sales pace since February 2022.”
August's number represents a 14.6% increase from the July rate of 677,000 units. On an unadjusted basis, MBA projects 60,000 new home sales in August 2024, up 5.3% from July’s 57,000 sales.
By loan type, 59.7% of applications were for conventional loans, 29.6% for FHA loans, 0.5% for RHS/USDA loans, and 10.2% for VA loans. The average loan size for new homes also rose from $393,344 in July to $395,935 in August.
