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Home»Banking»Lower rates reinvigorated new home sales in March
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Lower rates reinvigorated new home sales in March

April 21, 2025No Comments2 Mins Read
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Lower rates reinvigorated new home sales in March
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The month of March saw a renewed interest in newly constructed properties, as rates slightly loosened and the spring homebuying season kicked off. 

New-home purchases grew 14% from the month prior, the Mortgage Bankers Association Builder Application Survey data reveals. This is up from the 0.4% growth seen in February and a 5.5% increase from a year ago.By loan type, conventional loans accounted for 49% of applications, while FHA and VA loans made up 37% and 13%, respectively.

“Applications for new home purchases increased in March, consistent with typical seasonal patterns and supported by mortgage rates that had been drifting lower,” said Joel Kan, MBA vice president and deputy chief economist, in a press release. 

The seasonally adjusted pace of new-home sales slightly dipped in March. As a result, sales amounted to 629,000 units, a 0.8% dip from 634,000 units a month prior.

“The growing inventory of newly built, move-in ready homes supported homebuyer interest over the month, pushing the index higher than last year’s levels. Our estimate of seasonally adjusted new-home sales saw a slight decline in March but were stronger than last year’s pace of sales,” added Kan.

Unadjusted sales amounted to 61,000 homes, a 7% increase from 57,000 properties purchased in February, the trade group’s estimates said.

Despite a spike in new-home purchase applications, it is too early to tell whether this trend will continue.

The average loan size for new homes decreased from $397,516 in February to $381,921 in March, per the survey.

Though that may soon change as a result of on-again, off-again tariffs, which may jack up material costs for homebuilders that ultimately get passed along to buyers.

See also  Can the Housing Market Stomach a Return to 7% Mortgage Rates?

As economic uncertainty remains due to inflation concerns, uncertainty around tariffs and shifting expectations about future Federal Reserve policy, interest rates have quickly rebounded, hovering close to 7%.

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