Applications for mortgages for new home purchases increased 26% in May compared with April and were up 10.9% compared with May 2019, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
The 26% month-over-month increase follows a 12% decrease in April.
“The solid increase in new home purchase applications in May is another indication of a recovery in the housing market,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Homebuyer traffic is rising, and homebuilders are continuing to ramp up production following the COVID-19 pandemic-related restrictions.
“We expect to see additional near-term strength in the coming months from the resumption of delayed sales activity caused by the social distancing and stay-at-home orders during March and April,” Kan adds.
The MBA estimates that sales of new single-family home as of May were running at a seasonally adjusted annual rate of 672,000 units.
That’s an increase of 26.1% compared with 533,000 units in April.
On an unadjusted basis, the MBA estimates that there were 65,000 new home sales in May, an increase of 27.5% compared with about 51,000 in April.
By product type, conventional loans composed 62.5% of applications for new home sales, while FHA loans composed 24.5%, VA loans composed 11.8% and RHS/USDA loans composed 1.2%.
The average loan size for a new home in May was $332,793, down from $334,641 in April.