On an unadjusted basis, applications to buy a brand new home rose 8.9% year-over-year in December, continuing a streak that started in February 2023. Volume compared to November was down by 3%, which MBA deputy chief economist Joel Kan attributed to normal seasonal factors.
Applications to use the Federal Housing Administration program for a new-home purchase reached the second highest level in the BAS history at 29%, Kan continued.
"First-time home buyers remained active in the new-home segment, as existing inventory for starter homes remains tight," Kan said in a press release. "MBA's estimate of seasonally adjusted new-home sales fell in December but remained slightly above last year's sales pace."
The trade group estimates that new single-family home sales were running at a seasonally adjusted annual rate of 601,000 units for December.
This is a drop-off of 15.7% from November's pace of 713,000 units.
On an unadjusted basis, 46,000 new home sales took place in December, a decrease of 6.1% from 49,000 units in November.
While FHA loans made up 29.4% of the application volume, 60% were for conventional mortgages, Veterans Affairs had a 9.9% share, while the remaining 0.5% were from the U.S. Department of Agriculture Rural Housing Service Program.
In good news when it comes to affordability, the average loan size for these properties decreased to $400,930 in December from $402,873 in November.
A separate report from Redfin found pending home sales fell 4.5% in December versus November. More alarming was the rate of pending home sales that fell through, a mark that reached a record high in December.
Nearly 40,000 home-purchase agreements were canceled in December, or 16.2% of transactions which went under contract. That's the highest December percentage in records dating back to 2017 and is up from 15.1% a year earlier.
Year-over-year, pending sales fell by 2.3%.
"Home buying activity will likely slow further in January due to the wildfires impacting Los Angeles — the nation's second most populous metro area — and winter storms impacting the Mid-Atlantic and Southeast," said Redfin senior economist Elijah de la Campa in a press release. "Rent prices, on the other hand, may tick up as people who have been displaced by the fires seek alternative housing."
