April data signals the first year-over-year decline since October 2025
New home purchase mortgage applications fell in April, weighed down by persistently elevated mortgage rates and a climate of economic uncertainty that has made would-be buyers increasingly cautious.
Data from the Mortgage Bankers Association's (MBA) Builder Application Survey showed applications for new home purchases dropped 2.4% compared with April 2025.
Month over month, volumes fell 10% from March, though the MBA noted that figure carries no seasonal adjustment.
"Ongoing economic uncertainty and higher mortgage rates contributed to lower purchase activity for newly built homes in April," said Joel Kan, MBA's vice president and deputy chief economist.
"Applications to purchase new homes fell below last year's pace, the first year-over-year decline since October 2025."
The pullback arrives at a complicated moment for the new home market.
Government data had shown new home sales rose 7.4% in March to a seasonally adjusted annual rate of 682,000, following an 8.9% jump in February — a short-lived burst of momentum that April's application figures now call into question.
Sales pace slides below 700,000 units
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 655,000 units in April. That's a decrease of 8.6% from the March pace of 717,000 units.
On an unadjusted basis, MBA pegs April at 60,000 new home sales, a 13% drop from the 69,000 recorded in March.
The average loan size for new homes dipped slightly, falling from $381,938 in March to $378,384 in April, reflecting both softer pricing and continued pressure on buyer affordability.
The modest decline in loan sizes is consistent with builders adjusting prices and increasing sales incentives, including appliances, mortgage rate concessions, and closing cost assistance, to move inventory.
By product type, conventional loans made up 49.5% of applications, while FHA loans accounted for 35.7%.
VA loans composed 13.7% and RHS/USDA loans rounded out the remainder at 1.1%.
Government-backed programs in total accounted for just over half of all applications in April, underscoring how much borrowers are relying on federal programs to bridge the affordability gap.
Kan flagged the reliance on government programs as a key theme: "FHA, VA, and USDA applications accounted for a little over half of all applications in April, as many borrowers continued to rely on government programs to help with affordability."
Rate environment keeps buyers on the sidelines
The headwinds are well-documented. The 30-year fixed-rate mortgage averaged 6.36% as of May 14, 2026, slightly down from the prior week's 6.37%, compared with 6.81% a year ago.
While that year-over-year improvement offers some encouragement, rates remain well above the levels that would meaningfully ease affordability for the typical new home buyer.
The MBA projects 30-year mortgage rates to stay between 6.1% and 6.3% in 2026, with its economists noting rates have moved more than 30 basis points higher over the past several weeks as longer-term yields have accounted for the increase in inflation.
Geopolitical turbulence has compounded the picture, with the conflict in the Middle East pushing crude oil prices sharply higher since hostilities began in late February, filtering directly into inflation expectations and pushing the yield on the 10-year US Treasury note higher, keeping downward pressure on mortgage rates at bay.
Despite the April setback, the MBA sees reasons for optimism ahead. High levels of unsold inventory in many markets are expected to gradually ease price pressures. Kan said the association expects "purchase activity to pick up in the coming months as upward price pressures continue to fade."
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