Applications for mortgages for new home purchases in July decreased 12% compared with June and increased 5.1% compared with July 2016, according to the Mortgage Bankers Association’s (MBA) Builder Applications Survey (BAS).
The change does not include any adjustment for typical seasonal patterns.
“The year over year increase in applications to home builders for new home purchase mortgages slowed down somewhat in July, after relatively strong showings in May and June,” says Lynn Fisher, MBA’s vice president of research and economics. “Nonetheless, the pattern of applications over the last three months suggests that housing starts will fall off less than expected during late summer and early fall as demand spills over from the low-inventory existing home market into the market for new homes. Year to date, through July, applications for new homes remain up by more than 7 percent compared to the same period last year.”
By product type, conventional loans composed 69.8% of loan applications, Federal Housing Administration loans composed 15.7%, Rural Housing Service/U.S. Department of Agriculture loans composed 1.1%, and Veterans Affairs loans composed 13.3%.
The average loan size of new homes increased from $327,833 in June to $329,483 in July.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 562,000 units in July 2017, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
The seasonally adjusted estimate for July is a decrease of 10.5% from the June pace of 628,000 units. On an unadjusted basis, the MBA estimates that there were 49,000 new home sales in July 2017, a decrease of 10.9% from 55,000 new home sales in June.