Mortgage applications on new home purchases perked up in February compared to a year ago, but the gains from the previous month were much more tepid.
New home mortgage purchase applications rose 15.7 percent year-over-year last month, according to a report from the Mortgage Bankers Association. The data comes from the organization’s Builder Application Survey, which tracks application volume from mortgage subsidiaries of homebuilders.
Mortgage rates have edged down in the past year, but remain far from the historic lows of the early pandemic days. That’s likely the cause of the surge in applications from last year.
But rates have also risen slightly from January. Applications increased a mere 1 percent from January to February, a change that doesn’t account for seasonal adjustment.
Rates will likely continue to be a driver of mortgage purchase applications. For the week ending on March 15, the rate of the average 30-year mortgage rose to 6.97 percent, according to the MBA’s weekly survey, the first rate jump after three weeks of declines.
The average loan size on purchases for new builds last month was $406,000, the highest in 11 months. The survey’s record is $436,000, set in April 2022.
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The FHA share of purchase applications, an indicator of first-time homebuyer activity, increased to 25.7 percent last month. The estimated sales pace of new homes, meanwhile, dropped slightly to 689,000 units.
On Wednesday, the Federal Reserve held interest rates steady again while signaling rate cuts could be in the offing. The MBA is projecting the first rate cut will come in June.
“We continue to expect longer-term rates, including mortgage rates, to decline gradually over the course of this year,” MBA chief economist Mike Fratantoni said following the Federal Reserve’s FOMC statement.