April New Home Purchase Mortgage Applications Increased 4.1 Percent
May 19, 2023
WASHINGTON, D.C. (May 19, 2023) – The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for April 2023 shows mortgage applications for new home purchases increased 4.1 percent compared to a year ago. Compared to March 2023, applications decreased by 11 percent. This change does not include any adjustment for typical seasonal patterns.
“Purchase applications for newly constructed homes declined in April but were up 4 percent compared to a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This was the third straight month of year-over-year growth in applications, which signals improving housing demand for newly built homes at a time when the broader housing market is leaning more on new construction to boost for-sale inventory levels. Mortgage rates have settled in the 6.5 percent range lately and remain over a percentage point higher than last year. The higher mortgage rate environment continues to factor into homebuying and selling decisions.”
Added Kan, “Since the brief pick-up in new home sales in January when mortgage rates dipped, the pace of new home sales has declined for the three consecutive months. With the recently released Census data showing single-family permitting activity on the upswing and housing starts also rising, we expect that to translate to growth in new home sales activity in the second half of the year.”
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 649,000 units in April 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 April is a decrease of 2.6 percent from the March pace of 666,000 units. On an unadjusted basis, MBA estimates that there were 58,000 new home sales in April 2023, a decrease of 10.8 percent from 65,000 new home sales in March.
By product type, conventional loans composed 66.2 percent of loan applications, FHA loans composed 23.4 percent, RHS/USDA loans composed 0.4 percent and VA loans composed 10 percent. The average loan size of new homes decreased from $407,015 in March to $401,756 in April.
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.