A notable shift in lending patterns emerges
Mortgage applications for new home purchases decreased 6% in January compared to the same month in 2024, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS). However, applications rose 19% from December 2024, unadjusted for seasonal trends.
“Applications to purchase newly constructed homes rebounded 19% from December but decreased from a year ago, the first annual decline in two years,” said Joel Kan, MBA’s vice president and deputy chief economist. “At an estimated annualized pace of 616,000 units, the new home market was subdued to start the year.”
Despite the annual decline, the share of Federal Housing Administration (FHA) loans continued to grow, making up just over 30% of applications—the highest in the survey’s history. “This increase is another silver lining in new home purchase activity, as a large proportion of FHA purchase loans go to first-time homebuyers,” Kan added.
The MBA estimates that new single-family home sales were running at a seasonally adjusted annual rate of 616,000 units in January, reflecting a 2.5% increase from December’s pace of 601,000 units. On an unadjusted basis, there were an estimated 56,000 new home sales in January, up 21.7% from 46,000 in December.
By loan type, conventional loans accounted for 57.8% of applications, FHA loans composed 30.2%, Rural Housing Service/US Department of Agriculture (RHS/USDA) loans represented 0.5%, and Veterans Affairs (VA) loans made up 11.4%. The average loan size for new homes increased from $400,930 in December to $403,416 in January.
The MBA’s Builder Application Survey compiles application volume data from mortgage subsidiaries of home builders across the country. This data serves as an early estimate of new home sales volume on a national, state, and metro level and provides insights into the types of loans used by homebuyers. Official new home sales data from the US Census Bureau, which records sales at contract signing, is released monthly.
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