New-Home Buyers Sat Out September: Mortgage Applications Fell 8.3% From a Year Ago, MBA Says

# New-Home Buyers Sat Out September: Mortgage Applications Fell 8.3% From a Year Ago, MBA Says

September was a rough month for new-home sales. Mortgage applications for new home purchases fell 8.3% compared to September of last year, according to the Mortgage Bankers Association's September Builder Application Survey, released October 15, 2026. It was also an 8% drop from August, a sign that buyers were not just slowing down, they were stepping back.

The reading matters because of what it measures. The Builder Application Survey tracks application volume from the mortgage subsidiaries of home builders across the country, which means it catches purchase demand at the source, before a contract is signed. MBA also says its new-home sales estimate has consistently been a leading indicator of the U.S. Census Bureau's New Residential Sales report, so this is an early look at where official numbers are headed.

The headline numbers

The details, all from MBA's release:

• Applications: down 8.3% year over year and down 8% month over month in September. Both figures are on an unadjusted basis; the release explicitly says the application change does not include any adjustment for typical seasonal patterns.
• Sales pace: MBA estimates new single-family home sales were running at a seasonally adjusted annual rate (SAAR) of 584,000 units in September, down 12% from the August pace of 664,000 units. This is the only seasonally adjusted figure in the release.
• Unit count: on an unadjusted basis, MBA estimates 47,000 new home sales in September, down 9.6% from 52,000 in August.
• Weakest pace claim: MBA said the 584,000-unit estimate "was the weakest sales pace since April 2020." That wording comes from the release itself; it was not independently re-verified against the full historical series, since the release does not print one.

The estimate is derived from mortgage application information in the Builder Application Survey plus assumptions about market coverage and other factors, MBA noted.

Rates did the damage, and first-time buyers felt it most

Joel Kan, CMB, MBA's Vice President and Deputy Chief Economist, put it plainly: "The increase in mortgage rates in September had a chilling effect for new home purchase activity. Both mortgage applications and new home sales declined and fell further behind last year's pace. MBA's estimate of new home sales at 584,000 units was the weakest sales pace since April 2020. The FHA share of applications decreased, and the average loan size increased, as higher mortgage rates had a greater impact on first-time homebuyers' purchase decisions."

That last sentence is the most telling. FHA loans are the first-time buyer's lane, and their share of applications decreased in September, though the release gives only the direction, not the size of the decline. Meanwhile the average loan size for new homes actually increased, from $373,194 in August to $374,724 in September. Read together, that pattern says higher-priced, repeat buyers kept borrowing while marginal first-time buyers dropped out of the market.

The loan mix for September: conventional loans 50.2%, FHA loans 34.7%, RHS/USDA loans 1.0%, and VA loans 14.1%.

What this means if you are shopping for a new home

This survey is one more hard-number anchor for the buyer freeze story playing out across the market. New homes are not moving, and the seller surplus that has been building all year is not clearing. When applications fall 8.3% year over year, builders are sitting on inventory that is not turning over.

For buyers, a freeze is leverage. Builders who need to move homes in a soft market have historically offered what resale sellers cannot: rate buydowns, closing-cost credits, design upgrades thrown in to close the deal, and occasionally outright price cuts on standing inventory. None of that is guaranteed, but September's numbers give shoppers a real data point to bring to the negotiating table.

The practical takeaway splits by buyer type. If you are a repeat buyer with a larger loan and stable financing, September's shift did not describe you; the average loan size rose, which means people like you kept buying. If you are a first-time buyer, MBA's read is direct: higher mortgage rates hit your segment hardest. With the rate backdrop still elevated, it is worth running the math on builder incentives before assuming a resale is the better deal. A builder-paid rate buydown can matter more than a lower sticker price when rates are high.

One caveat for buyers watching rates: MBA tied September's chilling effect specifically to the rate increase that month. If rates ease, application volume is the first thing that tends to snap back, and it moves faster than closed sales. Watch the next Builder Application Survey release for the turn.

FAQ

What is the MBA Builder Application Survey? It is the Mortgage Bankers Association's monthly survey tracking mortgage application volume from the mortgage subsidiaries of home builders across the country. Because it measures applications at the builder level, it captures purchase demand early, before contracts close.

How far did new-home purchase applications fall in September 2026? They decreased 8.3% from September 2025 on a year-over-year basis, and 8% from August 2026. Neither figure is seasonally adjusted; the release states explicitly that the application change includes no adjustment for typical seasonal patterns.

What was the estimated new-home sales pace? MBA estimated new single-family home sales at a seasonally adjusted annual rate of 584,000 units in September, down 12% from 664,000 in August. This SAAR figure is the only seasonally adjusted number in the release. On an unadjusted basis, MBA estimated 47,000 new home sales, down 9.6% from 52,000 in August.

Is 584,000 really the weakest sales pace since April 2020? MBA's release states that, inside its quoted statement from Joel Kan. The release does not print a historical series table, so the claim is reported as MBA stated it rather than independently re-verified against the full series.

Why did the average loan size rise while applications fell? According to MBA, higher mortgage rates had a greater impact on first-time homebuyers' purchase decisions. The FHA share of applications decreased, and with marginal buyers dropping out, the remaining pool skewed toward larger, conventional loans, pushing the average from $373,194 in August to $374,724 in September.

Is MBA's estimate a good predictor of official new-home sales data? MBA says its estimate, derived from Builder Application Survey data plus market-coverage assumptions, has consistently been a leading indicator of the U.S. Census Bureau's New Residential Sales report.