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August New Home Purchase Mortgage Applications Increased 6.8 Percent Year over Year

WASHINGTON, D.C. (September 13, 2017) – (RealEstateRama) — The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2017 shows mortgage applications for new home purchases increased 6.8 percent compared to August 2016. Compared to July 2017, applications increased by 7 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.

“Mortgage applications for new homes rebounded a bit in August, as lower than expected interest rates and growth in existing home prices continue to fuel demand, sustaining year to date growth in applications of more than 7 percent compared to 2016,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “Average loan size for new homes increased in August to $334,940, the highest level since the series began. More than one-third of applications for new homes in our August survey came from Florida and Texas. It is unclear what impact hurricanes Harvey and Irma will have on housing starts in the region in coming months, but it is likely that recent new home sales will be delayed in breaking ground.”

By product type, conventional loans composed 71.9 percent of loan applications, FHA loans composed 14.4 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 12.7 percent. The average loan size of new homes increased from $329,483 in July to $334,940 in August.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 655,000 units in August 2017, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for August is an increase of 16.5 percent from the July pace of 562,000 units. On an unadjusted basis, the MBA estimates that there were 52,000 new home sales in August 2017, an increase of 6.1 percent from 49,000 new home sales in July.

MBA’s Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

For additional information on MBA’s Builder Applications Survey, please click here.

Ali Ahmad

(202) 557- 2727