Data from the Mortgage Bankers Association (MBA) Builder Application Survey for May indicates a 5% year-over-year decrease in mortgage applications for new-home purchases. Month over month, applications fell by 4%, which does not include any adjustment for normal seasonal patterns.
“Applications to purchase new homes in May fell by 4% from April, as mortgage rates hit 5.5% and further dampened demand. Activity was already constrained due to tight for-sale inventory, high sales prices, and extended building completion timelines,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“After increasing for 15 consecutive months, the average loan size fell slightly from April’s survey high to $430,855, which is a potential indication that cooling demand may be starting to moderate price growth. MBA’s estimate of new-home sales increased for the first time in five months, showing a 4% gain to a 727,000-unit sales pace.”
Based on data from the survey, MBA estimates new single-family home sales were running at an adjusted seasonal annual rate of 727,000 units for May. That estimate is made by using mortgage application information from the survey and assumptions of market coverage along with other factors.
For May, the seasonally adjusted estimate shows an increase of 3.7% from April’s 701,000 units. From an unadjusted basis, MBA estimates 61,000 new-home sales in May, a drop from 65,000 new-home sales in April, or 6.2%.
For new homes, the average loan size decreased from $436,576 in April to $430,855 in May. Conventional loans comprised 75.8% of loan applications, with FHA loans at 13.6%; RHS/USDA loans at 0.2%; and VA loans at 10.4%.
The survey tracks application volume through mortgage subsidiaries of home builders across the country. By using this data among other sources, MBA is able to provide an early estimate of new-home sale volumes for national, state, and metro levels. Official new-home sales estimates are conducted monthly by the Census Bureau.
