February New Home Purchase Mortgage Applications Increased 9.2 Percent
WASHINGTON, D.C. (March 16, 2021) - The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for February 2021 shows mortgage applications for new home purchases increased 9.2 percent compared from a year ago. Compared to January 2021, applications decreased by 9 percent. This change does not include any adjustment for typical seasonal patterns.
"The economy and job market continue to improve, but new home sales activity slowed in February. Builders continue to be confronted with rising input costs and a lack of available lots, causing them to slow production," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Applications for new home purchase mortgages decreased last month but remained over 9 percent higher than a year ago, and MBA's estimate of new home sales, at 748,000 units, was at its slowest annual pace since May 2020. After seven consecutive months of a strong 800,000-plus-unit sales pace, supply and demand imbalances are likely creating bottlenecks."
Added Kan, "The average loan size rose to a record high of over $370,000, and the conventional share of applications also hit a new high, as overall housing inventory levels remain extremely low and are pushing home prices higher."
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 748,000 units in February 2021, 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 February is a decrease of 17.3 percent from the January pace of 905,000 units. On an unadjusted basis, MBA estimates that there were 65,000 new home sales in February 2021, a decrease of 5.8 percent from 69,000 new home sales in January.
By product type, conventional loans composed 74.0 percent of loan applications, FHA loans composed 15.4 percent, RHS/USDA loans composed 1.5 percent and VA loans composed 9 percent. The average loan size of new homes increased from $363,493 in January to $370,679 in February.
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.