New Home Purchase Activity Strengthens in January, Driven by Concessions and ARMs
New home purchase activity experienced a boost in January, with both mortgage applications and new home sales showing gains, according to recent data from the Mortgage Bankers Association (MBA). This increase signals a potential tentative turn for builders after a softer start to the year.
Key Findings from MBA Data
Joel Kan, MBA’s Vice President and Deputy Chief Economist, noted the strengthening activity in January. The increase aligned with a stronger finish to 2025 for single-family housing starts, even as permitting remained relatively flat.
MBA’s January estimate for the sales pace of newly built homes rebounded slightly to 663,000 units, as buyers continued to utilize builder concessions and adjustable-rate mortgages (ARMs). The average loan size for a purchase application reached $385,506, the highest in 11 months.
Mortgage Application Breakdown
Conventional loans accounted for the largest share of January applications at 48.9%, followed by FHA loans at 34.9%. VA loans comprised 14.8% of applications, although RHS/USDA loans made up 1.3%.
Rising Loan Sizes Reflect Affordability Challenges
The average loan size for new homes increased from $380,607 in December to $385,506 in January. This underscores the challenges many buyers face in affording new construction, even as mortgage rates approached the mid-6% range late last year.
Annual Trends and Future Outlook
While January 2025 new-home applications were down 6% annually, the recent 2% gain suggests a possible shift for builders. Further data and analysis will be needed to confirm whether this represents a sustained trend.
About the Mortgage Bankers Association (MBA)
The Mortgage Bankers Association (MBA) is a leading trade association representing the real estate finance industry. Joel Kan serves as Vice President and Deputy Chief Economist for the MBA, responsible for macroeconomic and housing market forecasts [MBA – Joel Kan]. He also oversees the production of key industry surveys, including the Weekly Mortgage Applications Survey [MGIC – Joel Kan Webinar].