But MBA reports greater than expected demand for new homes
Mortgage applications to purchase new homes fell 17% from last year’s summer surge, according to the Mortgage Bankers Association’s latest report.
However, applications were up by 9% month over month in August. MBA estimates that there were 71,000 new home sales, up 10.9% from 64,000 in July.
“While the new home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Last month’s non-seasonally adjusted 9% increase in applications is an indication of greater than expected strength in demand, given that summer’s end is typically a slower period for new home purchases.”
Kan added that the surge in sales is consistent with improving homebuilder sentiment, as lumber prices continue to ease and demand for new homes remains strong.
Read next: Fannie Mae outlines latest economic growth outlook
MBA’s data also revealed that new single-family home sales were running at a seasonally adjusted annual pace of 874,000 units, a 12.2% gain from the July rate of 779,000 and the fastest sales rate since January 2021.
By product type, conventional loans made up 75.1% of loan applications, FHA loans accounted for 13.8%, RHS/USDA loans composed 0.6%, and VA loans represented 10.5% of total loan applications. The average loan size of new homes grew from $402,440 in July to $406,922 in August.
“Higher costs for materials, delivery delays, and growing labor shortages continue to pose as challenges and are ultimately pushing sales prices higher. The average loan size set another survey record at $406,922, and the share of loan applications for amounts greater than $400,000 accounted for over 40% of all applications, up from 28% a year ago,” Kan said.
