Does this indicate a shift in the market?
Mortgage applications for new home purchases fell by 6.9% in February compared to the same period last year, according to data from the Mortgage Bankers Association (MBA) Builder Application Survey (BAS). However, applications saw a slight increase of 0.3% from January 2025. The figures are unadjusted for typical seasonal patterns.
Source: MBA
“New home purchase activity strengthened in February, in line with seasonal patterns, as higher housing inventory and declining rates supported growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “However, applications to purchase newly built homes were lower than a year ago for the second straight month.”
Kan also noted that the Federal Housing Administration (FHA) share of applications reached a record high in the survey, making up nearly one-third of applications. Additionally, the average loan size decreased, reflecting continued activity from first-time homebuyers in the new home market.
Despite the year-over-year decline in mortgage applications, MBA’s estimate of seasonally adjusted new home sales increased for the second consecutive month, reaching its highest level in three months. The association projects that new single-family home sales ran at a seasonally adjusted annual rate of 634,000 units in February, a 2.9% increase from January’s pace of 616,000 units.
On an unadjusted basis, MBA estimates 57,000 new home sales in February, up 1.8% from 56,000 in the previous month.
By loan type, conventional loans accounted for 56.7% of applications, while FHA loans made up 32.1%, the highest share recorded in the survey. Rural Housing Service (RHS) and US Department of Agriculture (USDA) loans represented 0.6% of applications, while Veterans Affairs (VA) loans accounted for 10.6%. The average loan size for new homes declined from $403,416 in January to $397,516 in February.
MBA’s BAS collects mortgage application volume from home builder-affiliated mortgage subsidiaries across the country. This data, combined with other sources, allows the MBA to estimate new home sales at national, state, and metro levels. The US Census Bureau’s official new home sales report records sales at contract signing, which typically coincides with the mortgage application.
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