The mortgage industry has seen a surge in applications for new home purchases in the past year, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) for January 2018.
The BAS tracks application volume from mortgage subsidiaries of home builders throughout the country, providing data which MBA utilizes, along with information curated from other sources, to provide early estimates for new home sales volumes at the national, state and metropolitan level. The data also provides information regarding the types of loans used by new home buyers.
The BAS results indicate an 18.4 percent increase in mortgage applications for new home purchases year-over-year, compared to January 2017. Applications have shot up 34 percent compared to December 2017. It is noteworthy that those results were not calculated on a seasonally-adjusted basis.
“Mortgage applications for new homes surged in January and were up 18 percent on a year over year basis,” MBA Vice President of Research and Economics Lynn Fisher. “This complements other positive news on US job growth suggesting that economic fundamentals are strong. Based on applications, we estimate that new home sales were running at a pace of 700,000 on a seasonally adjusted annual basis - the highest such estimate in our survey which began in 2013.”
Conventional loans accounted for 71.7 percent of loan applications tracked by the survey, FHA loans comprised 15.3 percent, Rural Housing Services (RHS)/U.S. Department of Agriculture (USDA) loans composed 1.2 percent and Veterans Administration (VA) loans composed 11.7 percent, per the results. There was a slight decrease in the average loan size of new homes from December to January – $339,203 to $338,918.
The MBA estimated that new single-family home sales were running at a seasonally adjusted annual rate of 700,000 units in January 2018, using mortgage application data from the BAS, as well as assumptions regarding market coverage and other factors.
The association estimated a seasonally adjusted increase of 26.4 percent from the December to January. On an unadjusted basis, the MBA estimated that there were 54,000 new home sales in January 2018, an increase of 35 percent from 40,000 new home sales in December.
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 often coincides with mortgage applications.