Demand For New Construction Continues To Climb

New Home Purchase Applications Surge in May 2024

The Mortgage Bankers Association (MBA) has released its Builder Application Survey (BAS) data for May 2024, revealing a significant increase in mortgage applications for new home purchases. The data shows a 13.8% rise compared to a year ago and a 1% increase from the prior month, unadjusted for typical seasonal patterns.

“There continues to be strength in the new home purchase market, as purchase applications increased in May compared to both the prior month and from a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. The persistent lag in existing home inventory in many markets has driven homebuyers to newly built homes. This trend is especially notable among FHA borrowers, who represented 26.5% of applications, the highest share since the survey high of 27.1% in November 2023.

Increase in New Home Sales and Loan Size Trends

MBA estimates that new single-family home sales were running at a seasonally adjusted annual rate of 702,000 units in May 2024, marking the strongest pace since October 2023. This estimate reflects a 0.4% increase from April's pace of 699,000 units. On an unadjusted basis, MBA estimates 63,000 new home sales in May 2024, a 1.6% increase from April’s 62,000 new home sales.


The average loan size for new homes decreased from $405,490 in April to $400,150 in May. This decline in average loan size indicates a potential shift towards more affordable new home options.

Breakdown of Loan Applications by Product Type

The data highlights the distribution of loan applications by product type in May 2024:

  • Conventional Loans: 63.4%

  • FHA Loans: 26.5%

  • USDA Loans: 0.3%

  • VA Loans: 9.8%

This distribution underscores the significant role that FHA loans play in the new home market, catering particularly to first-time homebuyers.

Implications for the Housing Market

The MBA’s Builder Application Survey provides early estimates of new home sales volumes at the national, state, and metro levels. Utilizing data from mortgage subsidiaries of home builders and other sources, MBA offers valuable insights into market trends and loan usage. Official new home sales estimates, conducted monthly by the Census Bureau, align closely with mortgage application activity, typically recorded at contract signing.

The sustained increase in new home purchase applications and sales highlights a robust demand for new housing, driven by limited existing-home inventory. As Joel Kan noted, “With existing-home inventory still lagging in many markets, many homebuyers have turned their interest toward newly built homes.” This trend indicates a healthy, if competitive, environment for new home builders and buyers alike.

(Source: mba.org)

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