“Purchase activity strengthened in May, with new-home mortgage applications and our estimate of new-home sales both showing increases compared to a year ago, at 20% and 15%, respectively,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “The average loan size for new-home applications decreased almost 3%, signaling the ongoing moderation in home prices and a shift to building lower-priced homes. Declining mortgage rates and more new entry-level supply are good news for the housing market this summer.”
Compared with April, mortgage applications for newly constructed homes increased by 0.1%. The application volume data is not seasonally adjusted.
New-home sales were running at a seasonally adjusted annual rate of 727,000 units, the MBA estimated using mortgage data from its Builder Application Survey, as well as assumptions regarding market coverage and other factors. This is a 0.7% increase from April’s pace of 722,000 units.
On an unadjusted basis, new-home sales totaled an estimated 69,000, unchanged from April.
During May 2018, new-home sales hit a seasonally adjusted annual rate of 626,000 units; on an unadjusted basis, 60,000 new homes sold during the month.
Average loan size for a new home decreased to $330,311 in May from $338,754 in April and $337,515 for May 2018.
Approximately 69.4% of new-home purchasers sought conventional mortgages, with 17.9% applying for Federal Housing Administration financing. Veterans Affairs-guaranteed mortgages made up 12% of this market while U.S. Department of Agriculture Rural Housing Service loan applications were at 0.7%.
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