Purchase Applications For New Homes Slowed In June

Mortgage applications for new home purchases increased by 0.7% in June 2024 year-over-year, the Mortgage Bankers Association (MBA) reported Thursday.

There was a significant drop month-over-month, however, as purchase applications decreased 16% from May, the MBA’s Builder Application Survey indicated.

“Applications for new home purchases slowed in June, consistent with broader declines in single-family construction and new building permits as well as typical seasonal patterns,” MBA’s Vice President and Deputy Chief Economist Joel Kan pointed out. “The average loan size edged lower for the second consecutive month, and the share of FHA applications increased to 28.7 percent, as first-time buyers continue to account for a growing share of demand for newly built homes.” 

MBA estimates new single-family home sales – consistently a leading indicator of the U.S. Census Bureau’s New Residential Sales report – were running at a seasonally adjusted annual rate of 626,000 units in June 2024. This is a decrease of 10.8% from the May pace of 702,000 units. 

“MBA’s estimate of new home sales showed a monthly decline to a pace of 626,000 units – the slowest in four months. Mortgage rates dipped below seven-percent in June but that did little to spur purchase activity.” 

By product type, conventional loans composed 60.8 percent of loan applications, FHA loans composed 28.7%, RHS/USDA loans composed 0.3%, and VA loans composed 10.2%. The average loan size for new homes decreased from $400,150 in May to $399,879 in June.