Applications for mortgages for new home purchases increased increased 0.2% in December compared with November and were up 42.2% compared with December 2019, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS).
“The new home sales market closed out 2020 strong,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Mortgage applications in December were essentially unchanged from November, but activity was up 42 percent compared to December 2019.
“Despite the ongoing economic impact of the pandemic, households seeking more space, assisted by low mortgage rates, drove the demand for new homes higher,” Kan says. “This brought the three-month estimated average of new home sales to 877,000 units, and the 2020 average to around 796,000 units – much higher than the 717,000 units in 2019.
“In the coming months, we expect home building to continue to ramp-up to meet demand. Housing inventory, particularly for existing homes, is still extremely tight,” Kan adds.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 876,000 units in December – an increase of 5.9% compared with November.
On an unadjusted basis, MBA estimates that there were 59,000 new home sales in December, unchanged compared with November.
By product type, conventional loans composed 73.3% of applications for new home purchases in December; FHA loans composed 15.8%; VA loans composed 10%; and RHS/USDA loans composed 0.9%.
The average loan size for a new home purchase increased to $367,502, up from $357,554 in November.