Applications for mortgages for new home purchases increased 1% in May compared with April and were up 13.8% compared with May 2023, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS).
“There continues to be strength in the new home purchase market, as purchase applications increased in May compared to both the prior month and from a year ago,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “With existing-home inventory still lagging in many markets, many homebuyers have turned their interest toward newly built homes, particularly FHA borrowers. The FHA share of applications was 26.5 percent, the highest share since the survey high of 27.1 percent in November 2023. The average loan size was $400,150, a decline from last month’s average of more than $405,000.”
“MBA’s estimate of new homes shows a slight increase to 702,000 units in May, the strongest pace since October 2023,” Kan adds.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 702,000 units in May, an increase of 0.4% from the April pace of 699,000 units.
On an unadjusted basis, the MBA estimates that there were 63,000 new home sales in May 2024 – an increase of 1.6% from 62,000 new home sales in April.
By product type, conventional loans composed 63.4% of loan applications, while FHA loans composed 26.5%, RHS/USDA loans composed 0.3% and VA loans composed 9.8%.
The average loan size for new homes decreased to $400,150, down from $405,490 in April.
Photo: Todd Kent