Rising mortgage rates and slow new construction activity likely drove the monthly decline
Applications for new-home purchases came in slower than expected in April, according to Builder Applications Survey (BAS) data released by the Mortgage Bankers Association (MBA).
While mortgage applications for new-home purchases rose 7.5% compared to April 2017, application volume declined by 5% compared to March. The month-over-month change does not include any adjustment for typical seasonal patterns.
Joel Kan, associate vice president of economic and industry forecasting at MBA, said an increase in new-home purchase activity is typically expected in April.
“Despite a strong economy and job market, the decrease in April was likely due to a combination of rising mortgage rates and slow new construction activity, as builders still face a shortage of skilled labor and increasing materials costs, among other challenges," Kan said.
In April, conventional loans accounted for 71.6% of loan applications, while FHA loans composed 15.1%. RHS/USDA loans made up 1.2%, and VA loans accounted for 12.1%. The average loan size of new homes decreased to $336,870 in April from $337,597 in March.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 656,000 units in April. The estimate is a decrease of 3.8% from the March pace of 682,000 units. On an unadjusted basis, the MBA estimates that there were 63,000 new-home sales in April, a decrease of 3.1% from 65,000 new-home sales in March.
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