New-Home Mortgage Demand Falls for Fifth Month
Mortgage applications for new homes dropped 6% in August, marking the fifth consecutive monthly decline. The drop extends a trend of weakening demand driven by rising financing costs.
Mortgage application volumes for new-home purchases fell for the fifth consecutive month in August. The decline was driven by rising home financing costs. Data from the Mortgage Bankers Association confirms the downward trend. This marks the third annual decrease since last October.
Rising Rates Pressure Buyer Demand
Average rates for 30-year loans reached 6.8% in August. This is up from 6.1% in February. Rates remained in the 6.4% to 6.6% range during May and June. Affordability challenges continue to hurt buyer purchasing power. New-home sales in July were 6% lower than a year ago.
Shift Toward Government-Backed Loans
Buyers increasingly turn to Federal Housing Administration loans. FHA applications accounted for 35% of total volume in August. This is the highest share in three months. Conventional loans comprised just under half of applications. Veterans Affairs loan applications rose to 13.9% from 13.6%.
Sales Volumes Remain Below Prior Year
Seasonally adjusted new-home sales accelerated to an annualized rate of 664,000. This pace is still 9% lower than last year. Unadjusted sales fell to 52,000 units in August. This represents a 3.7% drop from July. Average loan amounts decreased slightly to $373,194. Builders continue to rely on financing incentives to close deals.
