Renewed interest in the new single-family residential market was "helped by sustained demand for new homes and declining mortgage rates," said Joel Kan, MBA vice president and deputy chief economist in a press release. 

The latest data points to a reversal of June trends when monthly volume decreased 16% and came in virtually flat on an annual basis. The June numbers, which reflected both typical seasonal patterns as well as the effect of rising rates in the spring, are thus far proving to be an outlier in 2024 as volumes grew every other month so far this year. 

With existing inventory near historic lows for the past several months, builders continue to benefit with interest in their properties coming from aspiring homeowners, who provided some lift to what has been a largely subdued housing market. Borrower interest in July also headed up thanks to declining mortgage rates, which started July near 7% before steadily dropping in the following weeks.

Among the segment of borrowers contributing to the noticeable recent uptick are first-time buyers and other households applying through Federal Housing Administration loan programs. 

FHA mortgages, often used for purchases on the more affordable end of the market, took their largest portion of new-home applications since MBA launched the builder survey in 2013 with 29.1%. The new record surpassed the previous high of 28.7% recorded in the last monthly survey.

"First-time buyers continue to account for a significant share of purchase activity, given the limited availability of starter homes around the country," Kan said.

Conventional loan applications nabbed the largest slice of volume with 60.1%. Shares of mortgage applications from other government-guaranteed programs in July came out to 10.4% for the Department of Veterans Affairs and 0.4% for the U.S. Department of Agriculture. 

Close to 57,000 new homes were sold in July by MBA's estimate. The number was 9.6% higher from 52,000 in June. The average purchase-loan amount contracted 1.6% to $393,344 from $399,879. A number of builders noted they were offering price cuts and other incentives this summer to help offload inventory.

The annualized volume of sales for new residential constructions is now running at a seasonally adjusted 677,000 units, rising 8.1% from 626,000 at the end of June. The change was "a result of buyers having additional buying options in the housing market," Kan remarked.

With predictions of a rate cut to come from the Federal Reserve later this year, the outlook for construction stands to improve, the National Association of Home Builders said this week. Despite last month's increased sales, current sentiment among builders fell, but a measure of purchase expectations for later this year inched upward, according to NAHB's research.