Mortgage Applications for New Homes Increase by 22% in December 2023
According to the recently released Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data, mortgage applications for new home purchases saw a significant increase of 22.2% when compared to the previous year. This surge in mortgage applications reflects the growing demand for new homes in the real estate market. Despite a decrease of 4% compared to November 2023, the data indicates a sustained upward trend in the market.
Low Inventory Drives Prospective Buyers to New Homes
The low inventory of existing homes available for sale continues to drive prospective buyers towards newly built homes. With fewer options in the existing home market, buyers are increasingly turning to new construction as a viable alternative. This shift in buyer preferences has contributed to the significant increase in mortgage applications for new home purchases.
December 2023 Sees 11th Consecutive Year-Over-Year Increase in Mortgage Applications for New Homes
The December 2023 data from the MBA’s BAS indicates that the increase in mortgage applications for new home purchases is not an isolated event. It marks the 11th consecutive year-over-year increase in applications, highlighting the sustained demand for newly constructed homes. This consistent growth in mortgage applications further reinforces the notion that new homes are becoming an increasingly popular choice for buyers in the current real estate market.
MBA Estimates December 2023 New Single-Family Home Sales at 599,000 Units
The MBA uses the mortgage application information from the BAS, along with assumptions regarding market coverage and other factors, to estimate new single-family home sales. The data suggests that in December 2023, new single-family home sales were estimated to be at an annual rate of 599,000 units, seasonally adjusted. Although this figure reflects a decrease of 11.5% from November’s pace of 677,000 units, it still indicates a strong and steady demand for new homes.
Average Loan Size for New Homes Rises to $405,368 in December 2023
The average loan size for new homes saw an increase from $390,049 in November to $405,368 in December 2023. This rise in average loan size indicates that buyers are willing to invest more in their new home purchases. It may also suggest that the higher cost of new construction is not deterring buyers, as they continue to seek out new homes despite the higher price tag. This increase in loan size reflects the growing importance of new homes in the real estate market and the willingness of buyers to make larger financial commitments in pursuit of their dream homes.
To summarize, the recently released MBA Builder Application Survey (BAS) data for December 2023 highlights the sustained growth in mortgage applications for new home purchases. The low inventory of existing homes is driving prospective buyers towards newly constructed homes. The data also shows that December 2023 marks the 11th consecutive year-over-year increase in mortgage applications for new homes. The MBA estimates new single-family home sales at 599,000 units in December, reflecting a steady demand for new homes. Furthermore, the average loan size for new homes increased to $405,368, indicating buyers’ willingness to invest more in their new home purchases. These trends demonstrate the strong and growing appeal of newly built homes in the current real estate market.
Analyst comment
Positive news: Mortgage applications for new homes increase by 22% in December 2023, marking the 11th consecutive year-over-year increase. Low inventory of existing homes drives buyers to new construction. MBA estimates new single-family home sales at 599,000 units, reflecting strong and steady demand. Average loan size for new homes rises to $405,368.
As an analyst, the market is expected to continue its upward trend with sustained demand for newly constructed homes. This is driven by low inventory in the existing home market and buyers’ willingness to invest more in new homes despite higher prices. The steady increase in mortgage applications and new home sales indicate a strong and growing appeal for newly built homes in the real estate market.
