Mortgage applications for new home purchases were up 43% in January compared with December but were flat compared with January 2018, according to the Mortgage Bankers Association’s (MBA) Builder Applications Survey (BAS).
The surprising month-over-month increase follows three consecutive months of decreases.
The reason for the stark monthly increase is partly because December was an abysmal month for home sales activity.
“After two lackluster months, new home sales surged almost 30 percent in January to the fastest pace since our survey began in 2013,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The healthy job market, faster wage growth, moderating price gains and lower mortgage rates, all helped home sales recover. Additionally, builders seem to be seeing improvement in their labor shortages, as government survey data showed increases in construction hiring and openings in December.”
Sales of new single-family homes were running at a seasonally adjusted annual rate of about 713,000 units in January, the MBA estimates. That’s an increase of 29.2% compared with about 552,000 units in December.
On an unadjusted basis, there were about 54,000 new home sales in January, an increase of 45.9% compared with about 37,000 in December.
The average loan size for a new home in January was $334,532, down from $334,944 in December.