Mortgage Demand for New Homes Declines 6.9% Year Over Year
- Neil Caron
- Mar 20
- 2 min read
The Mortgage Bankers Association (MBA) reports that mortgage applications for new-home purchases dropped 6.9% compared to February of last year. However, estimates indicate that 57,000 new homes were sold in February, reflecting a 1.8% increase from the previous month.
New-Home Mortgage Trends in February
According to the MBA’s Builder Application Survey, new-home purchase applications edged up slightly—by 0.3% from January—before seasonal adjustments.
“New home purchase activity strengthened in February, in line with seasonal patterns, as higher housing inventory and declining rates supported growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “However, applications to purchase newly built homes were lower than a year ago for the second straight month.”
The Federal Housing Administration (FHA) loan applications reached a record high, making up nearly one-third of all mortgage applications. A decrease in average loan size suggests that first-time homebuyers continue to be active in the market, Kan added.
Breakdown of Loan Types
Conventional loans accounted for 56.7% of applications.
FHA loans made up 32.1% of applications, reaching a survey record high.
VA loans represented 10.6% of applications.
USDA loans had a 0.6% share.
The average loan size decreased from $403,416 in January to $397,516 in February, highlighting affordability shifts in the market.
New-Home Sales Outlook
MBA estimates that single-family new-home sales—a leading indicator for the U.S. Census Bureau’s new residential sales report—hit a seasonally adjusted annual rate of 634,000 units in February. This marks a 2.9% increase from January’s pace of 616,000.
On an unadjusted basis, MBA estimates 57,000 new homes were sold in February, up from 56,000 in January. The official new-home sales data from the U.S. Census Bureau records sales at the time of contract signing, aligning with mortgage applications.
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