New home purchase mortgage applications soared by 21.8% compared to a year ago, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for November.
“Lending on new construction has been the one bright spot in an otherwise slow year for purchase originations,” said Mike Fratantoni, MBA’s SVP and chief economist. “That trend continued in November, with applications to purchase a new home up 22% compared to last year, while the purchase market as a whole remains about 20% behind last year’s pace."
The data showed that a growing proportion of new home demand is being financed through FHA loans, indicating that first-time buyers continue to play a crucial role in the housing market.
"It is also interesting to see that a growing portion of this demand for new homes is being financed by FHA loans," Fratantoni said. "This is a sign that first-time buyers remain a strong force in this market. We are forecasting that lower rates should help to keep this demand strong as we enter the spring homebuying season.”
Despite this promising surge in applications, the broader purchase market remains around 20% behind last year's pace.
The MBA also estimated that new single-family home sales ran at a seasonally adjusted annual rate of 677,000 units in November 2023. While this estimate represents a 5.3% decrease from October's pace, it highlights the continued demand for new homes.
By loan type, conventional loans made up 62.8% of the applications, FHA loans composed 27.1%, RHS/USDA loans accounted for 0.3%, and VA loans constituted 9.7%. Additionally, the average loan size for new homes slightly decreased from $390,225 in October to $390,049 in November.
