Applications for mortgages for new home purchases increased 1% in July compared with June and were up 39% compared with July 2019, according to the Mortgage Bankers Association’s Builder Application Survey.
It was the third consecutive month that applications for new home purchases increased on a month-over-month basis.
In June, new home applications increased 54% compared with May.
“New home sales activity continued to rebound in July after a pandemic induced low point in April 2020,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “In fact, applications for new home purchases with home builder affiliates were 39 percent higher than in July 2019. On an unadjusted basis, new home sales were estimated to be up 14 percent over the year and showed year over year gains for the second consecutive month in July.
“Typically, new home purchases peak in April and then decline through the remainder of the year,” Kan adds. “With the disruption this spring, seasonal patterns are not holding, and hence the seasonal adjustment is likely overstating the increase for this month. While this is a signal of still strong demand for housing, we remain concerned about supply. Housing starts have not kept up with demand and this could hold back the pace of sales in the coming months.”
New single-family home sales were running at a seasonally adjusted annual rate of 890,000 units in July, according to the MBA’s estimates. That’s an increase of 15% compared with an annual race of 774,000 units in June.
On an unadjusted basis, the MBA estimates that there were 72,000 new home sales in July, an increase of 1.4% compared with 71,000 in June.
By product type, conventional loans composed 67.2% of applications for new home sales in July, FHA loans composed 20.6%, RHS/USDA loans composed 1.2% and VA loans composed 11%.
The average loan size of new home increased to $345,929, up from $338,589 in June .