MBA: May New Home Purchase Mortgage Applications Up 26% from April; Up 11 Percent from Year Ago
New home activity showed signs of improvement in May as the Mortgage Bankers Association’s Builder Applications Survey saw increases in activity from April and a year ago.
BAS data for May reported mortgage applications for new home purchases increased by 26 percent from April and by 10.9 percent from a year ago. The changes do not include any adjustment for typical seasonal patterns.
By product type, conventional loans composed 62.5 percent of loan applications, FHA loans composed 24.5 percent, RHS/USDA loans composed 1.2 percent and VA loans composed 11.8 percent. The average loan size of new homes decreased from $334,641 in April to $332,793 in May.
“The solid increase in new home purchase applications in May is another indication of a recovery in the housing market,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “MBA estimates that new home sales rebounded 26 percent last month – a healthy turnaround after three months of declines. Homebuyer traffic is rising, and homebuilders are continuing to ramp up production following the COVID-19 pandemic-related restrictions. We expect to see additional near-term strength in the coming months from the resumption of delayed sales activity caused by the social distancing and stay-at-home orders during March and April.”
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 672,000 units in May, based on data from the BAS, an increase of 26.1 percent from the April pace of 533,000 units. On an unadjusted basis, MBA estimated 65,000 new home sales in May, an increase of 27.5 percent from 51,000 new home sales in April.
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.
