Mortgage applications for new-home purchases in December decreased 7.1% compared with December 2020, according to the latest Mortgage Bankers Association (MBA) Builder Application Survey (BAS). Compared with November, applications decreased by 5%.

“Applications to buy a new home slowed in December, while the activity remained tilted to higher-priced homes,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Supply chain challenges, labor shortages, and higher material costs also contributed to last month’s decline, as projects were delayed or cost more to complete. The average loan size set another survey record at $423,102, as these higher building costs are pushing sales prices higher.”

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 887,000 units in December, a decrease of 2% compared with the November pace.

Conventional loans composed 77.2% of loan applications, FHA loans composed 12.6%, RHS/USDA loans composed 0.4%, and VA loans composed 9.8%. The average loan size of new homes increased from $414,114 in November to $423,102 in December.