New-home purchase activity is showing renewed strength this spring, with loan applications hitting their highest mark on record, according to the Mortgage Bankers Association.
Mortgage applications for newly constructed single-family homes in April accelerated 5.3% from a year ago, the industry trade group said. On a month-over-month basis, loan volume increased
"The applications index reached its highest level in the survey's history dating back to 2012," said Joel Kan, MBA's vice president and deputy chief economist, in a press release.
"Despite the ongoing economic uncertainty and mortgage rate volatility, April was a strong month for new-home purchase activity, with applications posting an annual gain for the second straight month," he added.
April's elevated activity followed the previous month's annual rise of 5.5%, while volume between February and March leaped 14%. Recent numbers reflected a significant rebound from a
A growing number of new constructions on the market helped push buyers to the table, as builders attempted to offload supply amid
"As the unsold inventory of new homes continues to grow in many parts of the country, reduced buyer competition and pricing pressures supported more buying activity over the month," he said.
The average loan size on new-home purchase applications decreased to $376,992 in April from $381,921 in March.
Federal Housing Administration-backed loans, often attractive to first-time buyers searching for affordable properties, continued to increase their market share, expanding to a survey high 39.2% of total volume. FHA loans garnered 37% one month earlier.
Meanwhile, conventional mortgages accounted for the largest slice of the total, with 46.4% of all applications in April, down from 49% in March, MBA said.
New-home mortgage applications coming from the Department of Veterans Affairs represented a 13.5% share in April, up from 13% the previous month. U.S. Department Agriculture-backed activity took 0.9%, the same as in March.
Elevated buyer interest led the estimated volume of annual new-home sales to jump up to a seasonally adjusted 718,000 units last month, rising 14.1% from 629,000 in March.
Unadjusted monthly sales totaled 65,000 units in April, 6.6% higher from 61,000 in March, MBA said.
Why homebuilders are pessimistic despite the upswing
What appears to be positive news for lenders may mask problems for homebuilders and the rest of the housing market, though.
More than one-third of builders said they resorted to price cuts this month to attract customers, the highest share since late 2023. The latest number is up from 29% in April, according to the National Association of Home Builders.
Economic pressures, notably the ongoing threat of tariffs, led construction industry sentiment to plummet in May, NAHB's monthly homebuilder survey showed. Its index fell to a reading of 34 — the lowest in over two years — as the spectre of tariffs clouded future outlook. However, the majority of data was collected prior to a
"Policy uncertainty stemming in large part from the stop-and-start tariff issues has hurt builder confidence, but the initial trade arrangements with the United Kingdom and China are a welcome development," said NAHB Chief Economist Robert Dietz.
"Still, the overall actions on tariffs in recent weeks have had a negative impact on builders, as 78% reported difficulties pricing their homes recently due to uncertainty around material prices," Dietz added.
In recent earnings calls of the largest publicly traded homebuilders, several executives reported
Sales conditions and expectations for future transactions dragged NAHB's index downward. Builders also reported more pessimism surrounding customer traffic compared to April.
