Applications for mortgages for new home purchases decreased 2% in August compared with July and fell 4.6% compared with August 2017, according to the Mortgage Bankers Association (MBA) Builder Applications Survey (BAS).
The dip follows an increase of 0.2% the previous month. Low inventory and rising mortgage interest rates are likely the two main reasons why applications for new home purchases have been falling.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 669,000 units in August, an increase of 5% compared with about 637,000 units in July.
On an unadjusted basis, the MBA estimates that there were 53,000 new home sales in August, unchanged compared with July.
About 71.4% of the applications for mortgages for new home purchases in August were for conventional loans, while 15.6% were for FHA loans, 11.8% were for VA loans and 1.2% were for RHS/USDA loans.
The average loan size for a new home in August was $332,801, down from $337,775 in July.
Joel Kan, associate vice president of economic and industry forecasting for the MBA, says “low inventory of homes for sale has been an issue this year, and newly constructed units have been one way to ease the shortage.”
“Growth in August was focused in the lower price tiers,” Kan says in a statement. “In fact, for the first time in four months, monthly growth was driven by the lower half of the market, based on application size.”