MBA data shows continued strength in new construction
Applications for new home purchases continued to climb in May, signaling a growing strength in the new home market, according to data from the Mortgage Bankers Association (MBA).
MBA's Builder Application Survey (BAS) showed new home purchase applications grew 13.8% compared to a year ago and rose 1% from April 2024, not adjusted for seasonal patterns.
“There continues to be strength in the new home purchase market, as purchase applications increased in May compared to both the prior month and from a year ago,” said Joel Kan, MBA’s vice president and deputy chief economist.
MBA estimated that new single-family home sales reached a seasonally adjusted annual rate of 702,000 units in May, the strongest pace since October 2023.
A key driver of this growth is an increasing share of borrowers using Federal Housing Administration (FHA) loans.
“With existing-home inventory still lagging in many markets, many homebuyers have turned their interest toward newly built homes, particularly FHA borrowers,” Kan noted. “The FHA share of applications was 26.5%, the highest share since the survey high of 27.1% in November 2023.”
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Conventional loans remained the most common type of loan used, accounting for 63.4% of applications. FHA loans followed at 26.5%, with VA loans (9.8%) and RHS/USDA loans (0.3%) making up the remainder.
The average loan size for new homes decreased slightly in May, dropping from $405,490 in April to $400,150.
MBA's survey tracks mortgage application volume from home builders. With this data, the MBA can estimate national, state, and metro-level sales figures. It also reveals trends in loan types used by new homebuyers. While the Census Bureau provides official new home sales data, the MBA's BAS offers a timely preliminary picture of market activity.
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