August Purchase Mortgage Applications for New Homes Decreased 10.1 Percent
The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2022 shows mortgage applications for new home purchases decreased 10.1 percent compared to a year ago. Compared to July 2022, applications increased by 17 percent. This change does not include any adjustment for typical seasonal patterns.
MBA estimates new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 699,000 units in August 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.
“New home purchase applications were down year-over-year but rebounded in August after four consecutive months of declines, despite higher mortgage rates, declining homebuilder sentiment, and looming economic uncertainty. The average loan size decreased for the fourth straight month, which is a sign of slowing home-price growth in the new homes market,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Ongoing volatility in mortgage rates in the months ahead may lead to larger swings than is typical in the pace of new home sales. Between moderating sales prices and volatile mortgage rates, buyers seem to be biding their time.”
Added Kan, “MBA’s estimate of new home sales jumped 18 percent in August, bringing the sales pace to 699,000 units, which is the strongest pace since May 2022. The current sales pace is still 23 percent lower than the November 2021 peak and is down 20 percent from last year.”
The seasonally adjusted estimate for August is an increase of 18.3 percent from the July pace of 591,000 units. On an unadjusted basis, MBA estimates that there were 58,000 new home sales in August 2022, an increase of 16 percent from 50,000 new home sales in July.
By product type, conventional loans composed 72.1 percent of loan applications, FHA loans composed 17.0 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 10.7 percent. The average loan size of new homes decreased from $416,029 in July to $415,594 in August.
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.