May New Home Purchase Mortgage Applications Decline
Mortgage applications for new home purchases fell for the second straight month amid tight inventories and sharply rising prices, the Mortgage Bankers Association reported Thursday.
MBA Builder Applications Survey data for May show mortgage applications for new home purchases decreased by 9 percent from April and by 5.9 percent from a year ago. By product type, conventional loans composed 73.9 percent of loan applications, FHA loans composed 14.8 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 10.4 percent. The average loan size of new homes increased from $377,434 in April to a survey-high $384,323 in May.
Changes do not include any adjustment for typical seasonal patterns.
“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”
Kan said MBA’s estimate of new home sales showed the seasonally adjusted annualized pace of sales dropped 4 percent drop in May. “Since reaching a survey-high 927,000 units in October 2020, the annual pace of has now fallen around 20 percent, weighed down by low housing inventory and rising prices,” he said.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 741,000 units in May, a decrease of 3.8 percent from the April pace of 770,000 units. On an unadjusted basis, MBA estimated 68,000 new home sales in May, a decrease of 5.6 percent from 72,000 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 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.
