Purchase applications for new homes increased by 8.9% year-on-year in December 2024, according to a report released Friday by the. Mortgage Bankers Association (MBA). The volume of applications decreased by 3% compared to November.
MBA’s Builder Application Survey for December monitors application rates across all mortgage subsidiaries of US homebuilders. New home sales estimates have been released US Census Bureau data.
The December data represents the second consecutive month of annualized growth in new home purchases. In November 2024, the number of applications increased by 7.2% year-on-year, although it was still down 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 49,000 in November. MBA also reported a seasonally adjusted sales rate of 601,000, representing a 15.7% decline from November’s pace of 713,000 units.
Joel Kan, MBA vice president and deputy chief economist, highlighted the increase in government borrowing as a key factor in the growth of new housing.
“Applications for newly constructed housing increased 9 percent from a year ago in December, while FHA’s share of applications reached the second highest level in the survey’s history at 29 percent,” Kan said in a statement. “First-time homebuyers are always busy in the new housing segment, as the existing inventory of starter homes remains strong.”
I Federal Housing Administration The share (FHA) of loan activity increased to 29.4% – the second highest share in the history of the study. FHA loans are often used by first-time home buyers. US Department of Veterans Affairs (VA) and US Department of Agriculture (USDA) loans accounted for 9.9% and 0.5% of applications, respectively.
Meanwhile, the average loan size for new homes fell from $402,873 in November to $400,930 in December 2024.
This increase in demand for new homes is accompanied by growing confidence among homebuilders heading into 2025. National Association of Home Builders (NAHB)/ Wells Fargo The Housing Market Index (HMI), a single-family home builder confidence score, was 47 in January, up one point from December.
This may seem surprising, considering the pressure facing builders in the housing market in 2025. But home builders are still ready to take on new projects.
“Builders face continued housing demand challenges in the near term, as mortgage rates rise from near 6.1% in late September to over 6.9% today,” said NAHB chairman and custom homebuilder Carl Harris. “Land is expensive and financing private developers remains expensive. However, there is hope that policy makers take the impact of regulatory barriers seriously and will make progress by 2025. “
NAHB’s chief economist, Robert Dietz, predicted that a small profit will be built on single-family homes starting in 2025, but the conditions are not good.
“And while there was but little relief in the The Federal Reserve should help finance private builders pulled out of other local markets, builders report that cancellations are on the rise due to rising mortgage rates going back to about 7%,” said Dietz.
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