MBA: May New Home Purchase Mortgage Applications Up 20% from May, 54% from Year Ago
The home building market continued to show signs of sharp recovery from the coronavirus economy, the Mortgage Bankers Association reported this morning, with June mortgage applications for new home purchases increasing by 54.1 percent from a year ago and by 20 percent from May.
The MBA Builder Applications Survey said by product type, conventional loans composed 65.1 percent of loan applications, FHA loans composed 22.6 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 11.2 percent. The survey was unadjusted for typical seasonal patterns.
“The new home purchase market continues to recover,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50 percent from last June further reinforces that point.”
Kan said MBA anticipates new home construction will speed up to attempt to better meet demand. “However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly,” he said.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 774,000 units in June, based on data from the BAS, the strongest level since January. This represents an increase of 15.2 percent from the May pace of 672,000 units. On an unadjusted basis, MBA estimated 71,000 new home sales in June, an increase of 9.2 percent from 65,000 new home sales in May. The average loan size of new homes increased from $332,793 in May to $338,589 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.
