MBA NewsLink Staff
May 16, 2019
The Mortgage Bankers Association Builder Applications Survey reported mortgage applications for new home purchases increased by 15.6 percent in April from a year ago and by 3 percent from March.
The changes do not include any adjustment for typical seasonal patterns.
By product type, conventional loans composed 70.7 percent of loan applications, FHA loans 17.1 percent, RHS/USDA loans 0.6 percent and VA loans 11.5 percent. The average loan size of new homes increased from $331,794 in March to $338,745 in April.
“There was a healthy increase in new home purchase activity in April, boosted by the strong economic and employment conditions seen in the first quarter of 2019,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications for new home purchases increased, as did our estimate for new home sales.”
Kan added new home sales matched the highest annual pace since this survey’s inception in 2013.”
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 722,000 units in April, based on data from the BAS, an increase of 6.8 percent from the March pace of 676,000 units. On an unadjusted basis, MBA estimated 69,000 new home sales in April, an increase of 4.5 percent from 66,000 new home sales in March.
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 MBA Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using these data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state and metro level. These data also provide information regarding types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In those 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, click https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/builder-applications-survey.
In a separate report yesterday, the National Association of Home Builders reported builder confidence in the market for newly built single-family homes rose by three points to 66 in May, its highest level since last October.
All the HMI indices posted gains in May. The index measuring current sales conditions rose three points to 72, the component gauging expectations in the next six months edged one point higher to 72 and the metric charting buyer traffic moved up two points to 49.
Regionally, three-month moving averages showed the Northeast posted a six-point gain to 57, the West increased two points to 71, the Midwest gained one point to 54 and the South rose a single point to 68.
NAHB Chief Economist Robert Dietz said builders are catching up after a wet winter and many characterize sales as “solid, driven by improved demand and ongoing low overall supply.”
Dietz noted, however, affordability challenges persist. “Mortgage rates are hovering just above 4 percent following a challenging fourth quarter of 2018 when they peaked near 5 percent,” he said. “This lower-interest rate environment, along with ongoing job growth and rising wages, is contributing to a gradual improvement in the marketplace. At the same time, builders continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”