MBA: October New Home Purchase Applications Up 9% from September, 31.5% from Year Ago

Mortgage Bankers Association Builder Applications Survey data for October show mortgage applications for new home purchases increased by nine percent from September and by 31.5 percent from a year ago.

By product type, conventional loans composed 67.8 percent of loan applications, FHA loans composed 19.2 percent, RHS/USDA loans composed 0.7 percent and VA loans composed 12.3 percent. The average loan size of new homes increased from $330,807 in September to $335,235 in October.

“The new home sales market continues to be strong and was reinforced by October’s increase in applications for new home purchases,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “At an annual pace of 791,000 units, our estimate of new sales has reached its highest level since the inception of our survey in 2012. Home builder sentiment remains close to 18-month highs, and housing starts and permits have increased for four straight months. These are promising signs for the housing market, as the rise in new and existing housing supply has led to slower home-price growth and improving affordability.”

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 791,000 units in October, based on BAS data, and increase of 9.1 percent from the September pace of 725,000 units. On an unadjusted basis, MBA estimated 61,000 new home sales in October , an increase of 8.9 percent from 56,000 new home sales in September.

The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. 

Meanwhile, the National Association of Home Builders yesterday reported builder confidence in the market for newly built single-family homes edged one point lower to 70 in November.

The NAHB/Wells Fargo Housing Market Index noted, however, the past two months mark the highest sentiment levels in 2019. The HMI index gauging current sales conditions fell two points to 76 and the measure charting traffic of prospective buyers dropped one point to 53. The component measuring sales expectations in the next six months rose one point to 77.

Looking at the three-month moving averages for regional HMI scores, the Northeast posted a two-point gain to 62, the West rose by three points to 81 and the South moved one point higher to 74. The Midwest remained unchanged at 58.

NAHB said single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth. In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.

“There has been substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” NAHB said. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

The MBA Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using these 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 types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In those data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

For additional information on MBA’s Builder Applications Survey, click