Applications for mortgages for new home purchases increased 11% in October compared with September but were down 2.1% compared with October 2017, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
The increase follows a decrease of 3.9% the previous month.
“While we have seen some monthly swings in new home sales in 2018, the year-to-date average sales pace is around seven percent higher than the same period in 2017,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Additionally, the average loan size for a new home purchase application, at around $332,000, was at its lowest since July 2017.
“This is potentially a sign that there has been some additional inventory in the new home market, and that the rapid price growth in some geographies is starting to ease,” Kan says.
The MBA estimates that sales of new single-family home were at a seasonally adjusted annual rate of 673,000 units in October, up about 4.7% compared with about 643,000 units in September.
On an unadjusted basis, the MBA estimates that there were 53,000 new home sales in October, an increase of 6% from 50,000 new home sales in September.
Of the applications for new home purchases, about 70.9% were for conventional loans; 17.1% were for Federal Housing Administration loans; about 11.2% were for Veterans Affairs loans and about 0.7% were for Rural Housing Service/U.S. Department of Agriculture loans.
The average loan size of new home in October was $331,732, down from $333,086 in September.