Applications for mortgages for new home purchases decreased 16.2% in September compared with August and were down 4% compared with a year ago, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey.
“New home sales purchase activity was weaker in September, and the average loan size rose to another record high, as homebuilders continue to grapple with rising building materials costs and labor shortages,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The survey-high average loan size of $408,522 is evidence of higher sales prices from these higher costs, as well as the shift in new construction to larger, more expensive homes. The estimated pace of new home sales decreased 3.5 percent last month after a strong August reading, but the two-month sales pace is at its strongest since January 2021.”
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 843,000 units in September, down 3.5% compared with 874,000 units in August.
On an unadjusted basis, the MBA estimates that there were 66,000 new home sales in September, a decrease of 7% compared with 71,000 new home sales in August.
By product type, conventional loans composed 75.1% of loan applications, FHA loans composed 13.9%, RHS/USDA loans composed 0.5% and VA loans composed 10.5%.
The average loan size of new homes increased from $406,922 in August to $408,522 in September.