Applications for mortgages for new home purchases decreased 1% in October compared with September and were down 2.6% on an unadjusted basis compared with a year ago, but remain at healthy levels, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
New single-family home sales were running at a seasonally adjusted annual rate of 771,000 units, an increase of 13.4% compared with the September pace of 680,000 units.
On an unadjusted basis, the MBA estimates that there were 55,000 new home sales in October, an increase of 1.9% compared with 54,000 in September.
By product type, conventional loans comprised 51.9% of loan applications in October, while FHA loans represented 35.1%, RHS/USDA loans 0.7% and VA loans 12.3%.
The average loan size for a new home was $381,404, up from $379,107 the previous month.
“Lower mortgage rates, ongoing usage of builder concessions, and growing levels of for-sale inventory drove an increase in new home sales for October,” says Joel Kan, vice president and deputy chief economist for the MBA, in a release. “The annual sales pace, at 771,000 units, was the strongest in over a year.”
“The increased use of ARM loans, for which rates were averaging almost 80 basis points lower than fixed-rate loans, also contributed to the jump in sales and a slightly higher average loan size, the third monthly increase,” Kan says. “In October, our data showed that ARM loans accounted for 25 percent of applications, up from 16 percent a year ago.”
“The MBA’s new home sales estimate is a useful leading indicator of the Census new home sales number, which has not been published since the August data release,” he adds. “Unadjusted mortgage applications counts declined slightly over the month but remained at a healthy pace relative to the past three years.”
Photo: Alexander Andrews