MBA: May New Home Purchase Mortgage Applications Increased 16.6%

The Mortgage Bankers Association’s Builder Application Survey for May 2023 shows mortgage applications for new home purchases increased 16.6 percent compared from a year ago.

Compared to April 2023, applications increased by 8 percent. This change does not include any adjustment for typical seasonal patterns.

“Purchase activity for newly built homes was strong in May, with builders continuing to bring homes to the market and buyers keen to act on available units,” said Joel Kan, MBA vice president and deputy chief economist.  “Applications for purchase loans were up on a monthly basis and increased annually for the fourth consecutive month. Our estimate of new home sales also jumped in May, up 16 percent to the fastest pace of new home sales in 15 months.”

Kan noted the new home sales segment continues to gather momentum, growing at a pace of 5 percent compared to a year ago, while existing-home sales in recent months continue to experience annual declines of more than 20 percent on a non-seasonally adjusted basis. “These results were also broadly in line with the Census data showing an uptick in residential housing starts and permitting in recent months,” he said.

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, is that new single-family home sales were running at a seasonally adjusted annual rate of 755,000 units in May, based on data from the BAS. 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 seasonally adjusted estimate for May is an increase of 16.3 percent from the April pace of 649,000 units. On an unadjusted basis, MBA estimates that there were 64,000 new home sales in May 2023, an increase of 10.3 percent from 58,000 new home sales in April.

By product type, conventional loans composed 67.0 percent of loan applications, FHA loans composed 22.8 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 10 percent. The average loan size of new homes increased from $401,756 in April to $403,581 in May.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.