Applications for mortgages for new home purchases jumped 5% in October compared with September and were up 32.9% compared with a year ago, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS).
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 927,000 units in October, an increase of 6.7% compared with an annual rate of 869,000 units in September.
“New home sales activity was robust in October, with mortgage applications for new home purchases increasing almost 33 percent compared to October 2019, and five percent from last month,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “October is usually when home buying activity slows as the weather turns colder. However, this fall has been a different story, with delayed activity from the spring, and more households seeking larger homes with more indoor and outdoor space, driving demand. Additionally, the average loan size in October increased to $355,684, a new survey high since 2013.”
Kan says the projected increase in new home sales for October is “the highest seasonally adjusted pace in the survey.”
“These results are in line with the U.S. Census Bureau’s reported six percent gain in October single-family housing starts,” Kan says. “Homebuilders are boosting production based on strong current activity and sales expectations.”
On an unadjusted basis, the MBA estimates that there were 70,000 new home sales in October, an increase of 4.5% from 67,000 new home sales in September.
By product type, conventional loans composed 71.8% of applications for new home purchases, FHA loans composed 17.6%, RHS/USDA loans composed 0.8% and VA loans composed 9.9%.
The average loan size for a new home in October was $355,684, up from $354,316 in September.