Applications for Mortgages for New Home Sales Down 18% in December

Applications for mortgages for new home sales decreased 18% in December compared with November, as the effects of hurricanes Harvey, Irma and Maria, which hit Texas, Florida and Puerto Rico this past fall, continued to take a bite out of total volume, according to the Mortgage Bankers Association (MBA) Builder Applications Survey (BAS).

However, applications for new home sales increased 7.8% compared with December 2016, according to the report.

This change does not include any adjustment for typical seasonal patterns.

“After playing catch-up for two months following the slowdown caused by hurricanes Harvey, Irma and Maria, mortgage applications for new homes declined in December to a more normal growth rate of 7.8% on a year over year basis,” says Lynn Fisher, vice president of research and economics for the MBA, in a release.

“Looking at all of 2017, applications increased by 7.1 percent compared to 2016. Based on December applications, we forecast that new home sales fell in December but remained nearly 16 percent higher than a year ago, and we are anticipating only modest year over year growth for new home sales in 2018. Despite robust demand, a lack of labor and land will continue to constrain home builders.”

By product type, conventional loans comprised 72.5% of loan applications, Federal Housing Administration loans comprised 15.1%, Rural Housing Service/U.S. Department of Agriculture loans comprised 2.3% and Veterans Affairs loans comprised 10.1%.

The average loan size for a new home in December was $339,203, up from $337,427 in November.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 554,000 units in December 2017 – a decrease of 16.4% from the November pace of 663,000 units.

On an unadjusted basis, the MBA estimates that there were 40,000 new home sales in December – a decrease of 14.9% compared with about 47,000 in November.

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