January Builder Applications See Double-Digit Acceleration
MBA NewsLink Staff
The Mortgage Bankers Association’s Builder Application Survey data for January show mortgage applications for new home purchases increased by 17 percent month over month and by nearly 19 percent from a year ago.
Changes do not include any adjustment for typical seasonal patterns. By product type, conventional loans composed 72.6 percent of loan applications, FHA loans composed 16.2 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 10.3 percent. The average loan size of new homes decreased from $367,502 in December to $363,493 in January.
“New home sales activity started 2021 at a strong pace, with purchase mortgage applications for newly constructed homes jumping nearly 19 percent compared to last January,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “These results are consistent with the still-increasing pace of single-family housing starts and permitting activity reported over the last several months. The low supply of existing homes on the market and changing household preferences toward newer, larger homes, continue to spur buyer demand.”
MBA estimates new single-family home sales at a seasonally adjusted annual rate of 905,000 units in January, an increase of 3.3 percent from the December pace of 876,000 units and the second-highest pace since MBA began tracking such data in 2013; only October 2020’s pace of 927,000 was higher. On an unadjusted basis, MBA estimates 69,000 new home sales in January, an increase of 16.9 percent from 59,000 new home sales in December.
“MBA’s estimate of new home sales has proven to be a reliable leading indicator of the U.S. Census Bureau’s monthly new home sales number,” 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 Application 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 here.