New-home sales dropped in December compared with previous months, but remained above 2024 levels, according to new industry data.

Mortgage applications for new-home purchases decreased 15.2% on a seasonally-adjusted basis and 3% unadjusted from November to December, the Mortgage Bankers Association Builder Application Survey found. Compared with last December, applications increased 2.5%.

"December purchase activity for newly built homes continued to run stronger than last year, despite cooling slightly from the prior month," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release Thursday. "New homes remain a viable option for many homebuyers given that there is a relatively large number of new homes available for sale, which has prompted incentives and price reductions from builders in some markets."

New-home inventory sat at 488,000 in October, near the highest since 2007, according to government data.

Mortgage rates also declined slightly in December, as the 30-year fixed-rate mortgage started the month at 6.19% and finished at 6.15%. It currently sits at 6.06% after a 10-basis-point drop this week, Freddie Mac reported.

The MBA estimated new single-family home sales, a leading indicator of the U.S. Census Bureau's New Residential Sales report, had a seasonally-adjusted annual rate of 640,000 units in December, the slowest since May and significantly down from November's pace of 755,000, but still almost 7% higher than the same time last year, Kan said.

On an unadjusted basis, the MBA estimated 50,000 new-home sales in just December, a slight decrease from the 51,000 in November, the release said.

By product type, conventional loans regained a percentage point of its share of total applications last month, now sitting just above 50%. 

Department of Veterans Affairs-guaranteed loans and U.S. Department of Agriculture-backed loans each saw their shares rise to 13.8% and 0.9%, from 12.7% and 0.7%, respectively. Federal Housing Administration loans lost some of its share, dropping to 34.7% from 37.1%.

The average loan size for new homes also increased from $378,063 in November to $380,607 in December.

"In our latest forecast, we expect new home sales in 2026 will increase gradually as mortgage rates stay close to current levels and sales price growth remains muted, given the excess inventory," Kan said. "MBA's new home sales estimate continues to lead results from the Census Bureau, which currently only has data published through October due to delays stemming from the recent government shutdown."