Applications for mortgages for new home purchases jumped a whopping 40% in January compared with December and were up 35.3% compared with January 2019, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 865,000 units in January, an increase of 25% compared with about 689,000 units the previous month.
The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
“New home applications and sales activity surged in January,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a release. “This was a continuation of the end of 2019, which saw strong residential construction and increased purchase applications activity. Even with some global and domestic economic uncertainty, builders have ramped up production in recent months to meet increased homebuyer demand.”
The average loan size for a new home purchased in January increased to $346,000, up from from $338,625 in December to reach the highest level since the survey began in 2012.
On an unadjusted basis, MBA estimates that there were 66,000 new home sales in January, an increase of 37.5% compared with about 48,000 in December.
About 69.5% of applications for new home purchases were for conventional loans, while about 17.8% were for FHA loans, 12% were for VA loans and 0.8% were for RHS/USDA loans.