Back in August, the demand for new homes rose for the first time since March. The increase was short-lived as demand then fell in September. However, a new report shows that demand bounced back in October.
According to a new report from the Mortgage Bankers Association, mortgage applications for new home purchases increased by 6% in October over September.
The increase marks the second time since March that new home demand rose.
It should be noted, however, that applications for new home purchases in October were down 15.2% from the same month last year. Nevertheless, the increase in demand was a welcome one, according to Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.
"Applications for new home purchases in October were down 15% from a year ago, but activity was 6% higher than in September. The strong monthly gain puts MBA's estimate of new home sales at its strongest pace since January 2021," Kan said.
As Kan notes, the average loan size for a new home purchase application continued rising, climbing to $412,000 in October, another new record.
“Recent U.S. Census data show an increasing share of new sales are for homes yet to be built or still under construction, and a shrinking share of completed homes,” Kan said. “Housing demand remains strong, and buyers are making quick decisions in a still very competitive market.”
Broken out by loan type, conventional loans made up 75.7% of loan applications in October, FHA loans were 13.5%, RHS/USDA loans were 0.5%, while VA loans made up 10.3%.