Does this indicate activity is starting to pick up in the housing sector?
Mortgage applications for new home purchases saw a significant rise in July, with a 9.4% increase compared to the same period last year, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data. Additionally, applications rose by 9% from June 2024, underscoring continued demand for new homes amid favorable mortgage rates. Notably, these figures are unadjusted for typical seasonal patterns.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the growth to sustained buyer interest and declining mortgage rates. “Purchase applications for newly built homes increased 9% in July, helped by sustained demand for new homes and declining mortgage rates,” Kan said. He also highlighted that the Federal Housing Administration (FHA) share of applications reached 29%, the highest in MBA’s survey history dating back to 2013.
“First-time buyers continue to account for a significant share of purchase activity, given the limited availability of starter homes around the country. Our estimate of new home sales also showed an 8% increase over the month, which is a result of buyers having additional buying options in the housing market,” Kan noted.
The MBA has estimated new single-family home sales were running at a seasonally adjusted annual rate of 677,000 units in July 2024. This represents an 8.1% increase from the June pace of 626,000 units. On an unadjusted basis, new home sales are estimated at 57,000 units for July, up 9.6% from 52,000 units in June.
Regarding loan distribution, conventional loans composed 60.1% of applications, FHA loans 29.1%, RHS/USDA loans 0.4%, and VA loans 10.4%. The average loan size decreased slightly from $399,879 in June to $393,344 in July, indicating a modest shift in the market.
The MBA’s Builder Application Survey provides estimates of new home sales volumes, leveraging mortgage application data and market assumptions. These insights offer a glimpse into the housing market’s trajectory ahead of the US Census Bureau’s official New Residential Sales report, which is based on contract signings coinciding with mortgage applications.
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