Purchase mortgage applications for new homes rose 8.9% year over year in December 2024, according to a report released Friday by the Mortgage Bankers Association (MBA). Application volume decreased by 3% compared to November.
MBA’s Builder Application Survey for December monitors application volumes across mortgage subsidiaries of U.S. homebuilders. New-home sales estimates are pulled from U.S. Census Bureau data.
December’s data represents the second consecutive month of annualized growth for new-home purchase mortgage. In November 2024, application volume rose 7.2% year over year, although it still declined 12% from October. MBA notes that these data points do not include seasonal adjustments.
According to the report, an estimated 46,000 new homes were sold in December 2024 — down 6.1% from the 49,000 solid in November. MBA also reported a seasonally adjusted annualized sales rate of 601,000, representing a 15.7% decrease from November’s pace of 713,000 units.
Joel Kan, MBA’s vice president and deputy chief economist, highlighted a rise in government loan activity as a key factor behind new-home mortgage growth.
“Applications for newly built homes increased 9 percent compared to a year ago in December, while the FHA share of applications reached its second highest level in the survey’s history at 29 percent,” Kan said in a statement. “First-time homebuyers remained active in the new home segment, as existing inventory for starter homes remains tight.”
The Federal Housing Administration (FHA) share of loan activity ramped up to 29.4% — the second-highest share in the history of the survey. FHA loans are commonly used by first-time homebuyers. U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans accounted for 9.9% and 0.5% of applications, respectively.
Meanwhile, the average loan size for new homes decreased from $402,873 in November to $400,930 in December 2024.
This increase in new-home mortgage demand coincides with growing confidence among homebuilders going into 2025. According to the National Association of Home Builders (NAHB)/ Wells Fargo Housing Market Index (HMI), the builder confidence score for single-family home construction was 47 in January, up one point from December.
This may seem surprising, considering the pressure facing builders in the 2025 housing market. But homebuilders are still poised to take on new projects.
“Builders are facing continued challenges for housing demand in the near-term, with mortgage rates up from near 6.1% in late September to above 6.9% today,” NAHB chairman and custom homebuilder Carl Harris said. “Land is expensive and financing for private builders remains costly. However, there is hope that policymakers are taking the impact of regulatory hurdles seriously and will make improvements in 2025.”
NAHB chief economist Robert Dietz said a slight gain is forecast for single-family housing starts in 2025, but conditions are not ideal.
“And while ongoing but slower easing from the Federal Reserve should help financing for private builders currently squeezed out of some local markets, builders report cancellations are climbing as a direct result of mortgage rates rising back up near 7%,” Dietz said.
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