September Builder Apps Down 13% from Year Ago
Mortgage applications for new home purchases in September fell by 7 percent from August and by 13.2 percent a year ago, the Mortgage Bankers Association reported Tuesday.
By product type, conventional loans composed 69.8 percent of loan applications, FHA loans composed 18.7 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 11.2 percent. The average loan size of new homes decreased from $415,594 in August to $406,767 in September. Changes do not include any adjustment for typical seasonal patterns.
“New home purchase activity declined in September as prospective homebuyers pulled back in response to higher mortgage rates, increased concern about an impeding recession, and a broader slowdown in home-price growth,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “The average 30-year fixed mortgage rate increased almost a full percentage point in the last month, greatly reducing the purchasing power of many home shoppers. MBA’s estimate of new home sales declined 9 percent in September, partially reversing the 18 percent increase in August during that brief period when mortgage rates decreased.”
MBA estimates new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, at a seasonally adjusted annual rate of 637,000 units in September, based on data from the BAS, a decrease of 8.9 percent from the August pace of 699,000 units. On an unadjusted basis, MBA estimates 52,000 new home sales in September, a decrease of 10.3 percent from 58,000 new home sales in August.
MBA said the average loan size measured in the survey fell for the fifth consecutive month – after reaching a survey high in April– to $406,767.”
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.