• Key Insight: New-home sales estimates just plummeted to their lowest volume in six years.
• Supporting Data: 584,000 units, the seasonally adjusted estimate for a major housing sector.
• Forward Look: Get ready for mortgage rates to remain near their current elevated levels.

Overview bullets generated by AI with editorial review.

Estimates for new-home sales are now running under last year's level, with September's rate jump hitting a segment that showed signs of buyer interest amid the housing market slowdown, the Mortgage Bankers Association said.

The rise in interest rates last month left a mark on lending businesses and borrowers, driving mortgage applications on new single-family homes 8.3% lower compared with September 2025, the trade group reported. On a month-over-month basis, application volumes also dropped 8%. Numbers were not seasonally adjusted.  

The decline in applications accelerated from 5.5% and 6% in yearly and monthly decreases reported in August.

"Both mortgage applications and new home sales declined and fell further behind last year's pace," said Joel Kan, MBA's vice president and deputy chief economist, in a press release. 

Estimated sales are now running at a seasonally adjusted 584,000 units, which is the lowest volume in more than six years, according to MBA's calculations. Based on activity earlier in the summer, the forecast was raised to 664,000 units in September's report, with numbers representing a 12% swing.

Approximately 47,000 new-home sales transactions occurred last month, a decrease of 9.6% from 52,000 in August. 

The trends underscore challenges in front of mortgage lenders as rates remain stubbornly elevated, with the MBA recently advising them to pay attention to revenue streams to differentiate between winners and losers. Expectations are for rates to stay near current levels for the foreseeable future.  

"The average loan size increased, as higher mortgage rates had a greater impact on first-time homebuyers' purchase decisions," Kan also noted. Between August and September, the mean amount recorded on new-home purchase applications rose from $373,194 to $374,724.

FHA lending share shrinks

The sharp ramp-up in mortgage rates is causing a widespread slowdown across home finance, with overall loan-application volumes falling for five straight weeks, according to MBA data. While the market for new homes encountered similar headwinds, activity previously showed hints of interest coming from buyers seeking potential deals with builders. A majority of the latter continue to offer incentives in hopes of generating business momentum, the National Association of Home Builders said. 

Current rates are now making a difficult year even more troublesome for homebuilders, with sentiment recently falling to its lowest point in years. In September, the relative portion of Federal Housing Administration-backed applications for new homes, which are often used by first-time buyers, also decreased after nabbing larger shares consistently over the past few years.

FHA-guaranteed mortgages accounted for 34.7% of application volume last month after growing throughout the summer, edging down from 35% in August. 

Conventional lending made up just over half, or 50.2%, of new-home applications last month. Meanwhile, Department of Veterans Affairs-backed loans took a 14.1% share. Applications coming through the U.S. Department of Agriculture took the remaining 1%.