Mortgage applications for new home purchases in September jumped 10.8% compared to the same month a year earlier, but the number of applications fell 6% when compared to August, according to Builder Application Survey data compiled by the Mortgage Bankers Association (MBA).  

New single-family home sales were running at a seasonally adjusted annual rate of 680,000 units in September, which is a 12.4% drop from the August pace of 776,000 homes. On an unadjusted basis, MBA estimates there were 54,000 new home sales in September, a decrease of 10% from the 60,000 new homes sales in August.

Despite the downturn in applications for new home purchases, Joel Kan, MBA’s vice president and deputy chief economist, said the sales were consistent with seasonal patterns and continued to run ahead of last year’s pace. Home sales in September of 2023 were at a seasonally adjusted annual rate of 634,000 units, which was a 9.7% decrease from the August pace of 702,000 units.

“New home sales continue to be an appealing option for prospective homebuyers as mortgage rates were lower during the month and more newly built options have been coming onto the market,” Kan said. “The FHA share of applications was elevated to almost 29 percent, a sign that first-time buyers are active.”

Conventional loans accounted for 61.2% of the applications; FHA loans were next at 28.7%. Loans backed by the Veterans Administration composed 9.6% of September loans, while Rural Housing Service and USDA loans composed a scant 0.4%. The average loan size for new homes increased from $395,935 in August to $402,658 in September.

The MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. The MBA uses this data and information from other sources to develop an early estimate of new home sales volumes at the national state and metro level.