Recent data from the Mortgage Bankers Association (MBA) reveals a mixed picture for mortgage applications related to new home purchases.
Released on Tuesday, the MBA’s builder application survey shows that November 2024 saw a notable rise of 7.2% in mortgage applications compared to the same month the previous year.
However, when we look at October 2024 figures, there’s a more sobering story, with applications dropping sharply by 12%.
Trends in New Home Applications
Joel Kan, who serves as the MBA’s vice president and deputy chief economist, highlighted a sustained increase in applications for newly built homes, a trend that has persisted since February 2023.
This surge appears to be a response to challenges in affordability and a dwindling selection of existing homes.
Many buyers are gravitating toward new constructions as a more viable option.
The survey also revealed that the annualized rate of new single-family home sales hit 713,000 units in November.
This figure is a slight step back, representing a 4.6% decrease from October’s robust rate of 747,000.
According to Kan, this dip in applications aligns with the seasonal trends typically observed as the year winds down.
Role of First-Time Homebuyers
First-time homebuyers are playing a significant role in this market.
In fact, 28% of all applications in November were associated with FHA loans.
Despite the decrease in numbers, the seasonally adjusted annual rate of 713,000 new home sales marked the third-most successful month in 2024.
When we delve into the specifics, the MBA estimates that November saw around 49,000 new home sales—a decrease of 12.5% compared to the 56,000 sales recorded in October.
Looking at the types of loans, conventional loans were the most popular, making up 61.6% of applications, while FHA loans accounted for 28%, and VA loans were responsible for 9.9%.
Interestingly, the average loan amount for new homes also fell, dropping to $402,873 from the previous month’s average of $409,942.
Conclusion
In summary, while there are some bright spots in the new home purchase market, particularly in annual comparisons, the recent monthly decline serves as a reminder of the usual ebb and flow of the housing market as the year draws to a close.
Source: Housingwire