The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2021 shows mortgage applications for new home purchases decreased 17% compared from a year ago. Compared to July 2021, applications increased by 9%. This change does not include any adjustment for typical seasonal patterns.
“Mortgage applications to purchase new homes were down in August compared to 2020’s late summer surge, but both mortgage applications and MBA’s estimate of new home sales jumped last month compared to July,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“While the new home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale,” Kan continues. “Last month’s non-seasonally adjusted 9 percent increase in applications is an indication of greater than expected strength in demand, given that summer’s end is typically a slower period for new home purchases.”
“On a seasonally adjusted basis, new home sales jumped 12 percent in August to 874,000 units, the fastest pace of sales since January 2021,” Kan adds. “This is consistent with improving homebuilder sentiment, as lumber prices continue to ease and demand for new homes remains strong. However, higher costs for materials, delivery delays, and growing labor shortages continue to pose as challenges and are ultimately pushing sales prices higher. The average loan size set another survey record at $406,922, and the share of loan applications for amounts greater than $400,000 accounted for over 40 percent of all applications, up from 28 percent a year ago.”
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 874,000 units in August 2021, 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 August is an increase of 12.2% from the July pace of 779,000 units. On an unadjusted basis, MBA estimates that there were 71,000 new home sales in August 2021, an increase of 10.9% from 64,000 new home sales in July.
By product type, conventional loans composed 75.1% of loan applications, FHA loans composed 13.8%, RHS/USDA loans composed 0.6% and VA loans composed 10.5%. The average loan size of new homes increased from $402,440 in July to $406,922 in August.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.