April New Home Purchase Mortgage Applications Down 25% from March; 12 Percent from Year Ago

Mortgage Bankers Association Builder Applications Survey data for April show mortgage applications for new home purchases decreased by 12 percent compared from a year ago and by 25 percent from March.

By product type, conventional loans composed 62.0 percent of loan applications, FHA loans composed 23.3 percent, RHS/USDA loans composed 1.2 percent and VA loans composed 13.5 percent. The average loan size of new homes decreased from $344,556 in March to $334,641 in April.

The changes do not include any adjustment for typical seasonal patterns.

“New home purchase applications severely weakened in April, which coincided with the peak of the social distancing efforts and restrictions on non-essential activities to help slow the spread of COVID-19,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “During what’s typically the prime home buying season, activity fell 25 percent from March and decreased 12 percent from a year ago.

However, Kan noted “evidence now that unrealized, pent-up demand is being released as states start to reopen. We expect that heading into the summer, more prospective homebuyers will gradually return to the market.”

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 533,000 units in April, based on data from the BAS, a decrease of 23.5 percent from the March pace of 697,000 units. On an unadjusted basis, MBA estimated 51,000 new home sales in April, a decrease of 28.2 percent from 71,000 new home sales in March. 

“This decline was in line with data from our Weekly Applications Survey, which indicated a pullback in March and most of April,” Kan said.

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.