February mortgage applications for new home purchases increased 0.3% from January but fell 6.9% compared to a year ago, according to the Mortgage Bankers Association (MBA).
While the overall pace of new homes sales remains sluggish, the MBA estimates that 57,000 new homes were sold in February, an increase of 1.8% from the 56,000 new homes sold in January and the highest new-home sales pace in three months.
On a seasonally adjusted basis, MBA estimates that single-family home sales were running at an annual rate of 634,000 in February, an increase of 18,000 homes from January’s annual pace of 616,000.
Conventional loans composed 56.7% of loan applications, Federal Housing Administration (FHA) loans accounted for 32.1% and Veterans Administration loans made up 10.6% of the month’s total.
“New home purchase activity strengthened in February, in line with seasonal patterns, as higher housing inventory and declining rates supported growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “However, applications to purchase newly built homes were lower than a year ago for the second straight month. The average loan size declined, indicating that first-time homebuyers remain active in the new-home purchase market.”
First American Senior Economist Sam Williamson writes in a new report that homebuyers will have more new homes and affordable options in various markets, especially in the South during the 2025 spring home buying season.
According to the U.S. Census Bureau, nearly 1.5 million building permits were issued for privately-owned housing units in 2024, including single-family homes and multi-unit properties like duplexes and triplexes. However, this building surge has not been evenly distributed across the country. About 53% of the permits, or 803,000 units, issued in 2024 were in the South, more than double the number issued in any other census region.
“As we approach the 2025 homebuying season, increased residential construction activity offers a glimmer of hope for prospective buyers by boosting overall housing supply and, in turn, enhancing affordability,” Williamson writes.
