MBA: April New Home Purchase Mortgage Applications Down 11% from March; Up 4.1% from Year Ago
The Mortgage Bankers Association said April mortgage applications for new home purchases fell by 11 percent from March but rose by 4.1 percent from a year ago.
The Mortgage Bankers Association Builder Applications Survey said by product type, conventional loans composed 66.2 percent of loan applications, FHA loans composed 23.4 percent, RHS/USDA loans composed 0.4 percent and VA loans composed 10 percent. The average loan size of new homes decreased from $407,015 in March to $401,756 in April.
MBA estimated new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, fell to a seasonally adjusted annual rate of 649,000 units in April, based on data from the BAS, a decrease of 2.6 percent from the March pace of 666,000 units. On an unadjusted basis, MBA estimated 58,000 new home sales in April, a decrease of 10.8 percent from 65,000 new home sales in March.
“This was the third straight month of year-over-year growth in applications, which signals improving housing demand for newly built homes at a time when the broader housing market is leaning more on new construction to boost for-sale inventory levels,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Mortgage rates have settled in the 6.5 percent range lately and remain over a percentage point higher than last year. The higher mortgage rate environment continues to factor into homebuying and selling decisions.”
Kan noted since the brief pick-up in new home sales in January, when mortgage rates dipped, the pace of new home sales has declined for the three consecutive months. “With the recently released Census data showing single-family permitting activity on the upswing and housing starts also rising, we expect that to translate to growth in new home sales activity in the second half of the year,” he said.
The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. Changes do not include adjustments for typical seasonal patterns.
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.