After falling 14% month-over-month in March and 5% in April, applications for mortgages for new home purchases decreased 0.5% in May and were down 4.0% compared with May 2017, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
The change does not include any adjustment for typical seasonal patterns.
“Despite strong demand, builders have not been able to ramp up the supply of new homes, as they face rising costs from key inputs such as lumber and having to raise wages to fill open positions,” explains Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Additionally, our estimate of new home sales declined in May, reaching its lowest level since December 2017.”
New single-family home sales were running at a seasonally adjusted annual rate of about 626,000 units in May, according the MBA’s estimates. That’s a decrease of 4.6% from the April pace of 656,000 units.
On an unadjusted basis, the MBA estimates that there were about 60,000 new home sales in May, a decrease of 4.8% from about 63,000 in April but an increase of 5% compared with a year earlier.
By product type, conventional loans composed 71.1% of loan applications, FHA loans composed 15.8%, RHS/USDA loans composed 1.0% and VA loans composed 12.1%.
The average loan size for a new home in May was $337,515, up from $336,870 in April.