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Mortgage Applications for New Home Purchases Decreased 5 Percent in May

Washington – RealEstateRama – The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for May 2022 shows mortgage applications for new home purchases decreased 5 percent compared to a year ago. Compared to April 2022, applications decreased by 4 percent. This change does not include any adjustment for typical seasonal patterns.

“Applications to purchase new homes in May fell by 4 percent from April, as mortgage rates hit 5.5 percent and further dampened demand. Activity was already constrained due to tight for-sale inventory, high sales prices, and extended building completion timelines,” said 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.”

Added Kan, “MBA’s estimate of new home sales increased for the first time in five months, showing a 4 percent gain to a 727,000-unit sales pace.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 727,000 units in May 2022, 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 May is an increase of 3.7 percent from the April pace of 701,000 units.  On an unadjusted basis, MBA estimates that there were 61,000 new home sales in May 2022, a decrease of 6.2 percent from 65,000 new home sales in April.

By product type, conventional loans composed 75.8 percent of loan applications, FHA loans composed 13.6 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 10.4 percent. The average loan size of new homes decreased from $436,576 in April to $430,855 in May.

MBA’s Builder Application 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 Application Survey, please click here.

Adam DeSanctis
(202) 557-2727