July New Home Purchase Mortgage Applications Decreased 27.4% Y-o-Y, 4% from June

Mortgage applications for new home purchases decreased 27.4 percent compared to a year ago, the Mortgage Bankers Association Builder Application Survey reported.

Compared to June 2021, applications decreased by 4 percent. This change does not include any adjustment for typical seasonal patterns.

“Mortgage applications for new home purchases declined in July–as is typical every summer when home sales start to moderate–but did come in at the second-strongest July reading since the inception of MBA’s survey in 2012,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.

Kan noted the average loan size again increased to a new record $402,440. “Homebuilders are still facing elevated building costs and accelerating home-price growth from the continued imbalance between supply and demand,” he said. 

After adjusting for seasonal patterns, the MBA estimate of annualized new home sales showed a jump of more than 10 percent from June. “The housing market is still extremely competitive, and prospective buyers have increasingly turned to newly built homes because for-sale inventories remain so low,” Kan said.

MBA estimated new single-family home sales were running at a seasonally adjusted annual rate of 779,000 units in July, based on data from the Builder Application Survey. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. 

The seasonally adjusted estimate for July is an increase of 10.7 percent from the June pace of 704,000 units. On an unadjusted basis, MBA estimated that there were 64,000 new home sales in July 2021, a decrease of 3 percent from 66,000 new home sales in June. 

By product type, conventional loans composed 73.8 percent of loan applications, FHA loans composed 14.6 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 10.8 percent. The average loan size of new homes increased from $392,370 in June to $402,440 in July.

The MBA Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state and metro level. These data also provide information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application. 

Click here for additional information on MBA’s Builder Application Survey.