Applications for mortgages for new home purchases decreased 9% in May compared with April, as home buyers continued to sit on the sidelines, waiting for rates to come down, more inventory to come online, and home prices to further stabilize.
Year-over-year, applications for new home purchases were down 4.5%, according to the latest data from the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
“Economic uncertainty, rising mortgage rates, and increasing competition from growing existing-home sales inventory likely dampened overall demand for new home purchases in May,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Applications to purchase newly built homes fell to their slowest pace in three months as buyers held off on their purchase decisions. Estimated new home sales posted a 12 percent drop, reversing April’s large gain and closer to levels seen earlier in the year.”
New single-family home sales were running at a seasonally adjusted annual rate of 631,000 units in May, a decrease of 12.1% from the April pace of 718,000 units, the MBA says.
On an unadjusted basis, the association estimates that there were 58,000 new home sales in May, a decrease of 10.8% from 65,000 new home sales in April.
By product type, conventional loans composed 47.3% of loan applications, FHA loans composed 37.8%, RHS/USDA loans composed 1.0% and VA loans composed 13.8%.
The average loan size for a new home increased to $379,209 in May, up from $376,992 in April.
Photo: Alexander Andrews