Mortgage applications for new home purchases decreased 5% compared to a year ago and are down by 4% when compared to April 2022, according to the latest Builder Application Survey (BAS) data for May 2022 released by the Mortgage Bankers Association (MBA) this week. This change does not include any adjustment for typical seasonal patterns, MBA stated.
Key findings:
- MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 727,000 units in May 2022, based on data from the BAS.
- The seasonally adjusted estimate for May is an increase of 3.7% from the April pace of 701,000 units.
- On an unadjusted basis, MBA estimates that there were 61,000 new home sales in May 2022, a decrease of 6.2% from 65,000 new home sales in April.
- By product type, conventional loans composed 75.8% of loan applications, FHA loans composed 13.6%, RHS/USDA loans composed 0.2% and VA loans composed 10.4%.
- The average loan size of new homes decreased from $436,576 in April to $430,855 in May.
What this means:
“Applications to purchase new homes in May fell by 4% from April, as mortgage rates hit 5.5% and further dampened demand. Activity was already constrained due to tight for-sale inventory, high sales prices and extended building completion timelines,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “After increasing for 15 consecutive months, the average loan size fell slightly from April’s survey high to $430,855, which is a potential indication that cooling demand may be starting to moderate price growth.”
Added Kan, “MBA’s estimate of new home sales increased for the first time in five months, showing a 4% gain to a 727,000-unit sales pace.”
