New Purchase Apps Increased Slightly In February

Mortgage applications for new home purchases increased 1.2% in February compared to a year ago. The Mortgage Bankers Association (MBA) Builder Application Survey shows applications for new home purchases increased by 4% over January 2023.

“Applications for purchase new home sales were up in February and from the same time a year ago,” Joel Kan, MBA’s vice president and deputy chief economist, said. “The uptick in new home purchase applications showed a seasonal pick up, and that segment of the market continues to show healthier activity than the broader purchase market, which is still showing annual declines of over 30%.”

However, buyers still remain sensitive to movements in mortgage rates so when mortgage rates picked up in February it put a damper on housing activity, according to Kan. 

“The 5% drop in the estimated new home sales pace for February to 688,000 units reversed a January gain when buyers had a brief respite from rising mortgage rates, combined with discounts and concessions from sellers,” Kan said. “The decline in new home sales is likely less than that for existing home sales as home builders are motivated to sell homes in their construction pipeline.”

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 688,000 units in February 2023.

The seasonally adjusted estimate for February is a decrease of 5.1% from the January pace of 725,000 units. On an unadjusted basis, MBA estimates that there were 61,000 new home sales in February, a decrease of 3.2% from 63,000 new home sales in January. 

The average loan size of new homes increased from $401,631 in January to $406,953 in February.