Applications for new-home purchase mortgages ran ahead of last year's pace in September, but various factors have the leading industry trade group preparing for a near-term slowdown.
Purchase applications for new single-family properties increased 2% on a year-over-year basis last month, picking up some momentum after
Month to month, application volume decreased 5% compared to August activity. Numbers were not seasonally adjusted.
"Applications were down over the month, but were consistent with typical seasonal patterns for September," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
While some market conditions now
"Despite more inventory, builder incentives and lower mortgage rates, near-term demand is slowing as the labor market weakens," he said.
September activity led MBA to adjust its estimate of new-home sales to a seasonally adjusted annual rate of 680,000, falling off approximately 7% after reaching its 2025 high of 730,000 in August.
On a nonadjusted basis, new-home sales totaled 54,000 in September, 3.6% lower from 56,000 units sold in the previous month, MBA found.
The mean loan size on new-home purchases climbed higher by 1.3% to $379,107 from $374,288 in August, but the current average fell 5.8% from $402,658 in September 2024.
Although the average is still lower compared to a year ago, the prospect of price hikes for new homes remain on the horizon, with some leading publicly traded homebuilders hinting at
New-home sales breakdown by lending category
Conventional lending products accounted for over half of September's monthly new-home application volume with a 52.5% share of activity. The slice grew from 49.9% in August but contracted from 61.2% reported 12 months earlier.
Growth in conventional loans came at the expense of government-sponsored mortgages. Federal Housing Administration-insured applications made up 33.8% of volume, contracting from 35.6% one month earlier, but up from 28.7% in September 2024. While still accounting for over one-third of borrower activity, the FHA portion is off from recent all-time highs as potential buyers looked toward the new-home market due to sluggish turnover of existing properties in the past few years.
Applications sponsored by
The small sliver of U.S. Department of Agriculture-guaranteed mortgages represented 1% of September activity compared to 1.2% the previous month and 0.4% a year ago. All
As the government budget impasse prevents collection and release of census data, MBA's numbers are one of the few gauges of new-home sales currently available, the trade group said. Its monthly data comes from survey responses regarding borrowing activity provided by U.S. homebuilders' mortgage affiliates.
