MBA: July New Home Purchase Mortgage Applications Up 1% from June, 39% from Year Ago
The Mortgage Bankers Association this morning released its July Builder Applications Survey, reporting mortgage applications for new home purchases increased by 39 percent from a year ago and by 1 percent from June.
These changes do not include any adjustment for typical seasonal patterns.
By product type, conventional loans composed 67.2 percent of loan applications, FHA loans composed 20.6 percent, RHS/USDA loans composed 1.2 percent and VA loans composed 11 percent. The average loan size of new homes increased from $338,589 in June to $345,929 in July.
“New home sales activity continued to rebound in July after a pandemic-induced low point in April,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Typically, new home purchases peak in April and then decline through the remainder of the year. With the disruption this spring, seasonal patterns are not holding, and hence the seasonal adjustment is likely overstating the increase for this month.”
While the strong July numbers signal still-strong demand for housing, Kan said MBA remains concerned about supply. “Housing starts have not kept up with demand and this could hold back the pace of sales in the coming months,” he said.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 890,000 units in July, based on data from the BAS, an increase of 15 percent from the June pace of 774,000 units. On an unadjusted basis, MBA estimated 72,000 new home sales in July 2020, an increase of 1.4 percent from 71,000 new home sales in June.
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 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.