In a mixed bag for housing, mortgage applications for new homes jumped in March, while new-construction sales simultaneously fell amid affordability woes, according to the Mortgage Bankers Association (MBA).
Mortgage applications for new-home purchases rose 6.2% in March compared to the same period last year, according to data from the MBA’s Builder Application Survey (BAS). Meanwhile, March saw a 1% bump in new-home loan applications compared to February.
Joel Kan, MBA’s vice president and deputy chief economist, noted in a statement that March typically sees a surge in new-home purchases as the busy spring home selling season gets underway. However, this year, lingering affordability pressures may be sidelining would-be homebuyers.
“Applications were still ahead of last year’s pace, but at 6%, the annual growth rate was the slowest since September 2023,” Kan said in a statement. “Homebuyers remain adversely impacted by strong home-price growth and mortgage rates hovering around 7%.”
MBA’s estimates for new-home sales in March underscored waning buyer demand.
March sales fell 10.7% to a pace of 615,000 units compared to February’s 689,000 units on a seasonally adjusted basis. This marks the slowest new-home sales pace in four months, the MBA found.
There were 60,000 new-home sales in March, down 3.2% from 62,000 the month prior. The dismal sales figures and a slowdown in new-home mortgage applications suggest a cooling effect within new construction, which, until now, has bucked the sales slump in resale housing.
Conventional loans accounted for 63% of new-home mortgage applications; the FHA loan share of activity was 26.4%; VA loans comprised 10.4%; and USDA loans were a mere 0.3% of activity.
Although the average loan size for new homes slipped to $405,400 in March, down a bit from $405,719 the previous month, affordability remains a key concern as mortgage rates remain elevated thanks to stubbornly high inflation readings.
For more information, visit https://www.mba.org.
