Mortgage applications for newly built homes fell 2.4% in April compared with a year earlier, according to Builder Application Survey data released Monday by the Mortgage Bankers Association, marking the first year-over-year decline in new-home purchase activity since February 2025 and a sharp reversal from March’s record-high 11% annual surge.
The April reading, presented by Joel Kan, the MBA’s Vice President and Deputy Chief Economist, captures the moment the housing market began absorbing the full weight of the U.S.-Iran war, the post-conflict surge in mortgage rates, and renewed inflation pressure from elevated energy costs. Applications also declined 1% from March on an unadjusted basis, an unusual seasonal pattern given that April typically marks the heart of the spring buying season.
The pullback validates a warning Kan issued in early April, when overall purchase applications turned negative on an annual basis for the first time in more than a year. The MBA’s weekly survey through the latter half of April and early May has shown choppy, range-bound activity, with the 30-year fixed mortgage rate climbing from 6.30% in March to 6.65% as of last week, according to Mortgage News Daily. Treasury yields have remained elevated as markets price in fewer rate cuts from the Federal Reserve amid sticky inflation and energy-price pass-through from the Middle East conflict.
The MBA now estimates that new single-family home sales ran at a seasonally adjusted annual rate well below the 717,000-unit pace recorded in March, when builder activity had hit its highest level in the survey’s history dating to 2012. That earlier momentum, driven in part by builders cutting prices and offering rate buydowns to clear inventory, appears to have stalled as affordability deteriorated.
The new-home softness arrived alongside fresh confirmation of broader builder caution. The National Association of Home Builders/Wells Fargo Housing Market Index, released Monday, came in at 37 for May, up three points from April’s seven-month low of 34 but still deep in negative territory. NAHB Chairman Bill Owens, a builder and remodeler from Worthington, Ohio, said the housing market remains soft as higher mortgage rates, rising gas prices, and economic uncertainty tied to the war in Iran continue to dampen buyer demand. NAHB Chief Economist Robert Dietz pointed to climbing long-term interest rates as a continuing drag, noting that some regional markets, particularly parts of the Midwest, are showing relative strength while the broader market faces significant affordability challenges.
The NAHB index has now spent 25 consecutive months below the 50-point threshold separating builder optimism from pessimism. Roughly 32% of builders cut prices in May, down from 36% in April, but those who did reduced them by 6% on average, up from 5% the prior month. Sales incentives remained widespread, with 61% of builders offering them.
For the loan-product breakdown in April, FHA mortgages continued to account for an outsized share of new-home applications, reflecting heavy reliance on first-time and lower-down-payment buyers. The MBA’s weekly data has shown FHA contract rates running roughly 30 basis points below conventional 30-year fixed rates, a spread that has supported entry-level demand even as the overall market softens.
The Fannie Mae May Housing Forecast, released Sunday by the government-sponsored enterprise, pushed back its expectations for mortgage rate relief. The GSE now projects the 30-year fixed rate will hold near 6.3% through the first quarter of 2027 before easing to 6.2%, abandoning its earlier April projection that rates would reach 6.1% by year-end. The revision reflects the persistence of inflation pressures tied to energy prices and the labor market’s continued resilience.
The April BAS data carry implications well beyond the lending industry. Builders such as D.R. Horton, Lennar, PulteGroup, and NVR have leaned heavily on mortgage-rate buydowns and price concessions over the past two years to keep contract volume flowing. A sustained pullback in application activity would force tougher decisions on land acquisition, construction pacing, and margin protection heading into the back half of the year.
For consumers, the data underscore a market that has shifted decisively in favor of those who can still qualify and close. Unsold new-home inventory remains elevated across much of the South and parts of the West, giving qualified buyers more negotiating leverage than at any point in the post-pandemic cycle. But that leverage is being offset by the simple math of monthly payments, which have moved higher in lockstep with the recent rate climb.
The next major data point arrives Friday, when the Census Bureau releases its official April new home sales report. That figure, derived from contract signings, will either confirm the MBA’s signal of a cooling market or suggest the April slip was a temporary war-driven pause before spring demand reasserts itself.
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