Rising Rates, Tight Inventories Dampen MBA Builder Apps Survey
May mortgage applications for new home purchases fell by 4 percent from April and by 5 percent from a year ago, the Mortgage Bankers Association reported Thursday.
The MBA Builder Applications Survey said by product type, conventional loans composed 75.8 percent of loan applications, FHA loans composed 13.6 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 10.4 percent. The average loan size of new homes decreased from $436,576 in April to $430,855 in May.
Changes do not include any adjustment for typical seasonal patterns.
“Activity was already constrained due to tight for-sale inventory, high sales prices and extended building completion timelines,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “After increasing for 15 consecutive months, the average loan size fell slightly from April’s survey high to $430,855, which is a potential indication that cooling demand may be starting to moderate price growth.”
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 727,000 units in May, based on data from the BAS, an increase of 3.7 percent from the April pace of 701,000 units and the first increase in five months. On an unadjusted basis, MBA estimated 61,000 new home sales in May, a decrease of 6.2 percent from 65,000 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 the MBA Builder Applications Survey, click here.