MBA: October New Home Applications Up 6% From September, Down 15.2% from Year Ago

The Mortgage Bankers Association’s Builder Application Survey data for October show mortgage applications for new home purchases increased by 6 percent from September, but decreased by 15.2 percent from a year ago.

By product type, conventional loans composed 75.7 percent of loan applications, FHA loans composed 13.5 percent, RHS/USDA loans composed 0.5 percent and VA loans composed 10.3 percent. The average loan size of new homes increased from $408,522 in September to $412,339 in October.

Changes do not include any adjustment for typical seasonal patterns.

“The strong monthly gain puts MBA’s estimate of new home sales at its strongest pace since January,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity continues to be dominated by higher loan balance transactions, which pushed the average new home loan size up to over $412,000, another new record in the survey. Recent U.S. Census data show an increasing share of new sales are for homes yet to be built or still under construction, and a shrinking share of completed homes. Housing demand remains strong, and buyers are making quick decisions in a still very competitive market.”

Kan noted home builders still face delays and challenges from supply-chain bottlenecks and rising costs. “Overall construction costs, as measured by the Producer Price Index, recorded an annual increase of 12.3 percent in October, which is almost five times the average annual change,” he said.

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 897,000 units in October, based on data from the BAS, an increase of 6.4 percent from the September pace of 843,000 units. On an unadjusted basis, MBA estimated 68,000 new home sales in October, an increase of 3 percent from 66,000 new home sales in September. 

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.