Mortgage applications for new-home purchases decreased 17% compared to last year, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2021. Compared to July 2021, applications increased by 9%. This change does not include any adjustment for typical seasonal patterns.
The details:
According to MBA estimates using data from the BAS, new single-family home sales were running at a seasonally adjusted annual rate of 874,000 units in August 2021.
The seasonally adjusted estimate for August shows an increase of 12.2% from July’s pace of 779,000 units. Unadjusted, MBA estimates there were 71,000 new-home sales in August 2021—an increase of 10.9% from 64,000 new-home sales in July.
By product type:
– Conventional Loans: 75.1% of loan applications
– FHA Loans: 13.8%
– RHS/USDA Loans: 0.6%
– VA Loans: 10.5%
The average loan size of new homes increased from $402,440 in July to $406,922 in August.
The takeaway:
“Mortgage applications to purchase new homes were down in August compared to 2020’s late summer surge, but both mortgage applications and MBA’s estimate of new-home sales jumped last month compared to July,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, in a statement. “While the new-home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale. Last month’s non-seasonally adjusted 9% increase in applications is an indication of greater than expected strength in demand, given that summer’s end is typically a slower period for new-home purchases.”
“On a seasonally adjusted basis, new-home sales jumped 12% in August to 874,000 units, the fastest pace of sales since January 2021. This is consistent with improving home builder sentiment, as lumber prices continue to ease and demand for new homes remains strong. However, higher costs for materials, delivery delays and growing labor shortages continue to pose as challenges and are ultimately pushing sales prices higher,” added Kan. “The average loan size set another survey record at $406,922, and the share of loan applications for amounts greater than $400,000 accounted for over 40% of all applications, up from 28% a year ago.”
