New home purchase applications were down 6.1 percent year-over-year in December 2018, according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data. Applications dropped 13 percent compared with November 2018, applications decreased by 13 percent.
The decreases reported in the survey do not account for typical seasonal pattern adjustments.
“New-home sales declined for the second straight month in December, from 627,000 units to 552,000 units, as factors such as a volatile stock market and economic uncertainty, both here and abroad, likely kept some prospective buyers away,” MBA Association Vice President of Economic and Industry Forecasting Joel Kan said in a press release. “This pullback in activity was in spite of falling mortgage rates and a robust job market. Looking ahead, if mortgage rates remain low, housing inventory rises, and home-price growth continues to steady, we expect to see a rebound in purchase activity this spring.”
On a seasonally-adjusted basis, MBA estimates that new single-family home sales were running at an annual rate of 552,000 units in December, based on BAS data. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors, MBA noted.
The seasonally adjusted estimate for December represents a 12 percent dip compared with the November pace of 627,000 units. On an unadjusted basis, MBA estimates that there were 37,000 new home sales in December 2018, a decline of 17.8 percent from 45,000 new home sales in November.
Conventional loans were 69.5 percent of loan applications, while loans insured by the Federal Housing Administration (FHA) were 17.3 percent, Rural Housing Service/U.S. Department of Agriculture (RHS/USDA) loans made up 0.7 percent and loans insured by the Department of Veterans Affairs (VA) accounted for 12.5 percent. The average loan size of new homes ticked up from $326,037 in November to $334,944 in December.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country, helping MBA to offer an early estimate of new-home sales volumes at the national, state and metro level, MBA stated. 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 tends to be coincident with the mortgage application.