MBA August New Home Purchase Apps Down 4% from July, Up 33% From Year Ago

August mortgage applications for new home purchases increased by 33.3 percent from a year ago but fell by 4 percent from July, the Mortgage Bankers Association reported this morning.

The MBA Builder Applications Survey reported by product type, conventional loans composed 69.1 percent of loan applications; FHA loans composed 19.2 percent; RHS/USDA loans composed 1.1 percent; and VA loans composed 10.5 percent. The average loan size of new homes increased from $345,929 in July to $348,576 in August.

Changes does not include any adjustment for typical seasonal patterns.

“The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite economic uncertainty and the pandemic’s distortions to typical seasonal patterns, the comparisons to August 2019 show strength.”

Kan noted the new home market “has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.” 

The chart above shows the BAS estimate of new home sales in the blue bars against the U.S. Census Bureau series. The yellow line represents the revised/final estimates for the seasonally adjusted annualized rate, while the red line shows the initial Census estimates for May through July. MBA’s series, typically released a week or two in advance of the Census release, has thus far proven to be an accurate leading indicator of new home sales. 

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 871,000 units in August, based on data from the BAS, a decrease of 2.1 percent from the July pace of 890,000 units. On an unadjusted basis, MBA estimated 68,000 new home sales in August, a decrease of 5.6 percent from 72,000 new home sales in July.  

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.