Applications for mortgages for new home purchases tumbled 25% in April in Compared with March and were down 12% compared with April 2019, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
“New home purchase applications severely weakened in April, which coincided with the peak of the social distancing efforts and restrictions on non-essential activities to help slow the spread of COVID-19,” explains Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement.
“The MBA estimates that new home sales dropped to an annualized pace of 533,000 units – the slowest since December 2016,” Kan says. “This decline was in line with data from our Weekly Applications Survey, which indicated a pullback in March and most of April.
However, “there’s evidence now that unrealized, pent-up demand is being released as states start to reopen,” Kan says.
“We expect that heading into the summer, more prospective homebuyers will gradually return to the market.”
The estimate for 533,000 units in April represents a decrease of 23.5% from the March pace of 697,000 units.
On an unadjusted basis, MBA estimates that there were 51,000 new home sales in April, a decrease of 28.2% from 71,000 in March.
By product type, conventional loans composed 62.0% of applications for new home purchases, while FHA loans composed 23.3%, RHS/USDA loans composed 1.2% and VA loans composed 13.5%.
The average loan size for a new home in April was $334,641, down from $344,556 in March.