MBA: February Builder Applications Down 1% from January; 4% from Year Ago

Mortgage applications for new home purchases fell by 1 percent in February from January and by nearly 4 percent from a year ago, the Mortgage Bankers Association reported Thursday.

The MBA Builder Applications Survey reported mortgage applications for new home purchases decreased by 3.9 percent compared from a year ago. From January, applications fell by 1 percent.

By product type, conventional loans composed 76.9 percent of loan applications, FHA loans composed 12.9 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 9.9 percent. The average loan size of new homes increased from $426,954 in January to $432,359 in February.

Changes do not include any adjustment for typical seasonal patterns.

“New home purchase activity slowed in February, as for-sale inventories remained tight and mortgage rates increased to their highest levels since 2019,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “February is typically the start of the spring home buying season, but applications to purchase a new home were down on a monthly and annual basis.”

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 791,000 units in February, a decrease of 3.7 percent from the January pace of 821,000 units, the third straight monthly decrease. On an unadjusted basis, MBA estimated 66,000 new home sales in February, unchanged from January. 

“Over the last three months, mortgage rates have increased over 70 basis points, and combined with elevated sales prices, that is putting a weight on purchase activity,” Kan said. “The decline in activity was also consistent with somewhat weaker homebuilder sentiment and increased uncertainty for the industry as the crisis in Ukraine has worsened the situation for building material prices and availability.”

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.