New home sales are slow in December and show year-over-year gains

New home sales fell in December compared to previous months but remained above 2024 levels, according to new industry data.

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Mortgage applications for new-build homes purchases fell by 15.2% on a seasonally adjusted basis and 3% unadjusted from November to December, the Mortgage Bankers Association Builder Application Survey found. Compared to December last year, applications increased by 2.5%.

“New home purchase activity in December remained stronger than last year, despite a slight cooling from the previous month,” Joel Kan, MBA vice president and deputy chief economist, said in a news release Thursday. “New homes remain a viable option for many homebuyers as there are relatively large numbers of new homes for sale, which has led to incentives and price reductions from builders in some markets.”

The stock of new homes stood at 488,000 in October, close to the highest since 2007government data shows.

Mortgage interest too fell slightly in Decemberas the 30-year fixed rate mortgage started the month at 6.19% and ended at 6.15%. It is currently at 6.06% after one A decrease of 10 basis points this week Freddie Mac reported.

The MBA estimated that sales of new single-family homes, a leading indicator of the U.S. Census Bureau’s New Residential Sales report, had a seasonally adjusted annual rate of 640,000 units in December, the slowest since May and significantly lower than November’s pace of 755,000, but still nearly 7% higher than the same period last year, Kan said.

On an unadjusted basis, the MBA estimated 50,000 new home sales in December, down slightly from 51,000 in November, the release said.

By product type, conventional loans regained a percentage point of their share of total applications last month and are now just above 50%.

Department of Veterans Affairs-guaranteed loans and U.S. Department of Agriculture-backed loans saw their shares rise to 13.8% and 0.9%, respectively, from 12.7% and 0.7%. Federal Housing Administration loans lost some of their share, falling from 37.1% to 34.7%.

The average loan size for new homes also increased from $378,063 in November to $380,607 in December.

“In our latest forecast, we expect new home sales to gradually increase through 2026 as mortgage rates remain close to current levels and sales price growth remains subdued given excess inventory,” Kan said. “MBA’s new home sales estimate continues to lead results from the Census Bureau, which currently has only published data through October due to delays caused by the recent government shutdown.”