For the month of June, the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) shows mortgage applications for new-home purchases decreased 23.8% year over year. When compared with May, applications decreased by 3%, but that does not include any adjustments for typical seasonal patterns.
“Home builders are encountering stronger headwinds of late, as severe price increases for key building materials, rising regulatory costs, and labor shortages impact their ability to raise production. This has dampened new-home sales and quickened home-price growth,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Additionally, still low levels of for-sale inventory are also pushing prices higher as competition for available units remains high among prospective buyers.”
Based on data from the BAS, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 704,000 units in June. The seasonally adjusted estimate for June is a decrease of 5% from the May pace of 741,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new-home sales in June, a decrease of 2.9% from 68,000 new-home sales in May.
“Our estimate of new-home sales in June dropped to its lowest annual pace since May 2020 at 704,000 units,” adds Kan. “The average pace of sales has remained strong at around 738,000 for the past three months, but it is still around 7% lower than the average for 2020. Last year was strongest year for new-home sales in over a decade.”
By product type, conventional loans composed 74.4% of loan applications, FHA loans composed 14%, RHS/USDA loans composed 1%, and VA loans composed 10.6%. The average loan size of new homes increased from $384,323 in May to $392,370 in June.
