Mortgage applications for new-home purchases dropped 13% in October compared to September and were down 28.6% compared to a year earlier, according to the Mortgage Bankers Association’s Builder Application Survey.
New single-family home sales, meanwhile, slid to an annual, seasonally adjusted rate of 598,000 units in October, down 6.1% from September’s 637,000-unit sales pace. On an unadjusted basis, MBA estimated there were 47,000 new-home sales in October, a decrease of 9.6% from 52,000 transactions in September.
New single-family home sales have consistently been a leading indicator of the U.S. Census Bureau’s monthly new residential sales report, according to the MBA, which compiles its estimate from mortgage application information from the Builder Application Survey and assumptions about market coverage and other factors.
“New-home purchase activity weakened on a monthly and annualized basis in October, as the sharp jump in mortgage rates to nearly 7% reduced both overall demand and the purchasing power for many prospective buyers,” MBA Vice President and Deputy Chief Economist Joel Kan said in a press release. “The average loan size decreased to $400,616, down 8% from its peak in April 2022. The moderation in loan amounts is attributed to slower home-price growth and buyers stepping away from higher-priced homes.”