January New Home Purchase Mortgage Applications Decreased 3.5 Percent
WASHINGTON, D.C. (February 17, 2023) — The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for January 2023 shows mortgage applications for new home purchases decreased 3.5 percent compared to a year ago. Compared to December 2022, applications increased by 42 percent. This change does not include any adjustment for typical seasonal patterns.
“Applications for new home purchases increased in January, driven by typical seasonal patterns and lower mortgage rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate declined almost 40 basis points over the month and this stirred some homebuyers to act, especially those who might have delayed their purchase when mortgage rates were higher. MBA’s estimate of seasonally adjusted new home sales was also up robustly, seeing a 13 percent gain in the sales pace. However, activity was still 12 percent behind last year’s pace, when mortgage rates were over two percentage points lower. January was also a strong month for single-family housing completions, according to the U.S. Census Bureau. Home builders may have offered additional incentives to sell some of their inventory after last year’s slowdown in sales.”
Added Kan, “Home builders have reported improved sentiment in the last two months according to the NAHB’s HMI release, but Census data on new residential construction for January showed that single-family housing starts and permitting activity have not picked up yet. Additionally, home buyers remain sensitive to mortgage rates, which have trended higher in recent weeks and could delay a potential turning point in the housing market.”
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 725,000 units in January 2023, 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 January is an increase of 13.1 percent from the December pace of 641,000 units. On an unadjusted basis, MBA estimates that there were 63,000 new home sales in January 2023, an increase of 40 percent from 45,000 new home sales in December.
By product type, conventional loans composed68.4 percent of loan applications, FHA loans composed 20.3 percent, RHS/USDA loans composed 0.3 percent and VA loans composed 11 percent. The average loan size of new homes increased from $399,555 in December to $401,631 in January.
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.