March New Home Purchase Mortgage Applications Up
Mortgage Bankers Association Builder Applications Survey data showed mortgage applications for new home purchases increased by 14 percent in March from February and by 21.2 percent from a year ago, unadjusted.
By product type, conventional loans composed68.1 percent of loan applications, FHA loans composed 18.6 percent, RHS/USDA loans composed 1.4 percent and VA loans composed 11.9 percent. The average loan size of new homes increased from $340,169 in February to $344,556 in March.
“The strong increase in new home purchase applications was likely because of falling mortgage rates and stronger economic conditions at the start of the month,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “This boosted activity and offset the coinciding decline once COVID-19-related uncertainty and mitigation efforts sapped demand in the following weeks.”
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 697,000 units in March, based on data from the BAS, a decrease of 6.6 percent from the February pace of 746,000 units. On an unadjusted basis, MBA estimated 71,000 new home sales in March, an increase of 10.9 percent from 64,000 new home sales in February.
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 of new home sales decreased almost 7 percent last month,” Kan noted. Although that is a notable decline, it is not as steep as what has occurred in MBA’s weekly purchase applications data, which covers both the new and existing home markets. It is expected that new home purchase data in April will decrease.”
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 https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/builder-applications-survey.
(Photo credit: Emma Sorohan)