MBA data showed modest gains as buyers leaned on FHA and ARMs
Mortgage demand for newly built homes edged higher in November, even as activity cooled from October’s brisk pace, according to the latest Builder Application Survey from the Mortgage Bankers Association (MBA).
New-home purchase applications were up 3.1% year over year but down 7% month over month on an unadjusted basis, with no seasonal adjustment applied.
MBA estimated that new single-family home sales ran at a seasonally adjusted annual rate of 755,000 units in November, a 2.1% decline from October’s 771,000. On an unadjusted basis, sales slipped to about 51,000 units from 55,000 the prior month.
The average loan size eased to $378,063 from $381,404 in October. Conventional loans made up 49.5% of applications, with FHA at 37.1%, VA at 12.7% and RHS/USDA at 0.7%.
“While the arrival date of official data from the Census Bureau on the pace of new home sales remains ‘TBD,’ according to the Census website, MBA’s Builder Application Survey data show that new home purchase activity was up 3 percent on an annual basis in November, and down 7 percent from the prior month,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
“Mortgage rates have remained in a narrow range, and inventories of both new and existing homes on the market have increased. Potential buyers have more homes to choose from, and this removal of supply constraints is leading to a stronger sales pace.”
New-home buyer mix and FHA trend
Fratantoni said borrowers continued to reach for tools to make purchases pencil out. “New homebuyers continue to look for ways to extend their purchasing power or lower monthly payments, with 37 percent of new homebuyers using a mortgage choosing an FHA loan, and 24% choosing an ARM loan.”
MBA’s survey has tracked a rising FHA share over the past year. FHA loans made up “just over 30% of applications—the highest in the survey’s history,” as affordability pressures push more first-time and lower down-payment borrowers toward the government channel.
Market cooling from October’s high point
The November pullback followed a strong October, when MBA data showed applications down 2.6% year over year even as the annualized sales pace, at 771,000 units, was “the strongest in over a year,” MBA deputy chief economist Joel Kan said.
Kan added that “lower mortgage rates, ongoing usage of builder concessions, and growing levels of for-sale inventory drove an increase in new home sales for October.”
The Builder Application Survey compiles application volume from home builder–affiliated mortgage subsidiaries and serves as an early estimate of new-home sales at the national, state and metro levels, as well as the types of loans buyers used.
Taken together, the figures point to a market where slightly stronger demand meets slowly improving inventory, but where borrowers increasingly depend on FHA mortgages, adjustable-rate products and builder concessions to keep new construction within reach.
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