Mortgage applications for new-home purchases decreased 15.2% in October compared with a year ago, according to the latest Mortgage Bankers Association (MBA) Builder Application Survey (BAS). Despite the year-over-year declines, applications increased by 6% from September.
“The strong monthly gain puts MBA’s estimate of new-home sales at its strongest pace since January 2021,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Purchasing activity continues to be dominated by higher loan balance transactions, which pushed the average new-home loan size up to over $412,000, another new record in the survey. Recent U.S. Census data show an increasing share of new sales are for homes yet to be built or still under construction, and a shrinking share of completed homes.”
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 897,000 units in October, a 6.4% increase from the pace estimated in September.
“Home builders still face delays and challenges from supply-chain bottlenecks and rising costs,” says Kan. “Overall construction costs, as measured by the Producer Price Index (PPI), recorded an annual increase of 12.3% in October, which is almost five times the average annual change.”
Conventional loans composed 75.7% of loan applications, FHA loans composed 13.5%, RHS/USDA loans composed 0.5%, and VA loans composed 10.3%. The average loan size of new homes increased to $412,399 in October from $408,522 in September.
