Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for February 2022 shows mortgage applications for new home purchases decreased 3.9% compared from a year ago. Compared to January 2022, applications decreased by 1%.
“New home purchase activity slowed in February, as for-sale inventories remained tight, and mortgage rates increased to their highest levels since 2019,” states Joel Kan, MBA’s associate vice president of economic and industry forecasting. “February is typically the start of the spring home buying season, but applications to purchase a new home were down on a monthly and annual basis.”
The organization estimates new single-family home sales were running at a seasonally adjusted annual rate of 791,000 units in February 2022, 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 February is a decrease of 3.7% from the January pace of 821,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new home sales in February 2022, unchanged from the new home sales level in January.
“MBA estimates that new home sales declined for the third consecutive month, hitting the lowest sales pace in seven months at 791,000 units,” Kan adds. “Over the last three months, mortgage rates have increased over 70 basis points, and combined with elevated sales prices, that is putting a weight on purchase activity. The decline in activity was also consistent with somewhat weaker homebuilder sentiment and increased uncertainty for the industry as the crisis in Ukraine has worsened the situation for building material prices and availability.”
By product type, conventional loans composed 76.9% of loan applications, FHA loans composed 12.9%, RHS/USDA loans composed 0.3% and VA loans composed 9.9%. The average loan size of new homes increased from $426,954 in January to $432,359 in February.