Mortgage applications for new homes fell, but annual sales pace reached its strongest level in over a year
Mortgage applications for new home purchases in October 2025 dropped 2.6% compared to the same month last year, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey.
Month-over-month, applications slipped by 1%.
These figures are unadjusted for typical seasonal patterns, reflecting a market still wrestling with the aftershocks of higher rates and shifting buyer behavior.
Despite the dip in applications, the pace of new home sales surged.
“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 annual sales pace, at 771,000 units, was the strongest in over a year,” Joel Kan, MBA’s vice president and deputy chief economist, said.
The average 30-year fixed mortgage rate has slipped to its lowest level in 2025 so far, Freddie Mac said, offering relief for hopeful homebuyers across the country. The mortgage giant said that rate fell to 6.19% for the week ended October 23 compared with 6.27% the week before.
Kan also pointed to the increased use of adjustable-rate mortgages (ARMs) as a key factor, with ARMs making up 25% of applications, up from 16% a year ago.
“Rates were averaging almost 80 basis points lower than fixed-rate loans, also contributing to the jump in sales and a slightly higher average loan size, the third monthly increase,” Kan said.
The MBA’s estimate of new single-family home sales, a leading indicator for the US Census Bureau’s New Residential Sales report, pegged the seasonally adjusted annual rate at 771,000 units in October. That's up 13.4% from September’s pace of 680,000 units.
On an unadjusted basis, MBA estimated 55,000 new home sales in October, a 1.9% increase from the previous month.
By loan type, conventional loans accounted for 51.9% of applications, FHA loans 35.1%, VA loans 12.3%, and RHS/USDA loans 0.7%.
The average loan size for new homes ticked up to $381,404 from $379,107 in September.
Kan noted, “The MBA’s new home sales estimate is a useful leading indicator of the Census new home sales number, which has not been published since the August data release. Unadjusted mortgage applications counts declined slightly over the month but remained at a healthy pace relative to the past three years.”
While the headline numbers suggest a cooling in mortgage demand, the underlying data points to a market that remains resilient.
The increased use of ARMs and builder incentives, combined with a bump in inventory, have helped offset some of the drag from higher rates.
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