MBA: Applications for New Home Purchases Jumped 20% in May

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Applications for mortgages for new home purchases increased 20.1% in May compared with April and were up 0.1% compared with May 2018, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS), which tracks application volume from mortgage subsidiaries of home builders across the country. 

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

“Purchase activity strengthened in May, with new home mortgage applications and our estimate of new home sales both showing increases compared to a year ago, at 20 percent and 15 percent, respectively,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The average loan size for new home applications decreased almost three percent, signaling the ongoing moderation in home prices and a shift to building lower-priced homes.

“Declining mortgage rates and more new entry-level supply are good news for the housing market this summer,” Kan adds.

Sales of new single-family home sales were running at a seasonally adjusted annual rate of 727,000 units in May, according to the MBA’s estimates. That’s up 0.7% compared with the April pace of about 722,000 units.

On an unadjusted basis, the MBA estimates that there were 69,000 new home sales in May, flat compared with April.

The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

About 69.4% of applications for newer home purchases were for conventional loans. About 17.9% were for FHA loans, 12% were for VA loans and 0.7% were for RHS/USDA loans.

The average loan size for a new home was $338,745 in April, up from $330,311 in May.

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