New home purchase applications fall for fifth straight month in August

Mortgage applications for new home purchases continued their downward trend in August, marking the fifth consecutive month of decline as higher interest rates persist. The Mortgage Bankers Association (MBA) reported that applications fell 5.5% compared to the previous year and were down 6% from July. These figures are not seasonally adjusted.

Joel Kan, MBA’s vice president and deputy chief economist, noted that increasing mortgage rates are continuing to pressure new home sales activity. The MBA estimated new home sales at a seasonally adjusted annual rate of 664,000 units in August, a 2.6% increase from July's pace of 647,000, but still 9% below the year-ago pace. On an unadjusted basis, new-home sales were estimated at 52,000 in August, down 3.7% from 54,000 in July.

Amid the overall decline in applications, buyers increasingly turned to Federal Housing Administration (FHA) loans, which represented 35% of applications in August, the highest proportion in three months. Conventional loans accounted for 49.5% of applications, while U.S. Department of Veterans Affairs (VA) loans made up 13.9%, and U.S. Department of Agriculture (USDA) loans comprised 1.7%.

The average loan amount for a new home saw a slight decrease, falling to $373,194 in August from $374,438 in July. The MBA's Builder Application Survey collects data from homebuilder-affiliated lenders nationwide, offering an early indicator of new-home sales and buyer loan preferences.