For the sixth time in seven months, the Mortgage Bankers Association (MBA) reported that new-home purchase applications have increased over the same period a year earlier.
MBA reported that purchase mortgage originations in 2019 were at their highest level since 2006, and overall originations were $2.17 trillion.
Yet in 2020, applications for new-home purchases have continued to outpace 2019.
MBA’s Builder Application Survey (BAS) data for July 2020 showed mortgage applications for new-home purchases increased 39 percent compared from a year ago. The only month in which new-home purchase applications declined from the previous year was April, went applications were reported to be 12 percent lower than 2019.
Every other month has been increases, and most of them strong increases:
- January, up 35.3 percent
- February, up 25.9 percent
- March, up 21.2 percent
- May, up 10.9 percent
- June, up 54.1 percent
“New home sales activity continued to rebound in July after a pandemic induced low point in April 2020,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release. “On an unadjusted basis, new-home sales were estimated to be up 14 percent over the year and showed year-over-year gains for the second consecutive month in July.”
Compared to June 2020, applications increased by 1 percent. MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 890,000 units in July 2020. The new-home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
“Typically, new home purchases peak in April and then decline through the remainder of the year. With the disruption this spring, seasonal patterns are not holding, and hence the seasonal adjustment is likely overstating the increase for this month,” Kan stated. “While this is a signal of still strong demand for housing, we remain concerned about supply. Housing starts have not kept up with demand and this could hold back the pace of sales in the coming months.”
The seasonally adjusted estimate for July is an increase of 15 percent from the June pace of 774,000 units. On an unadjusted basis, MBA estimates that there were 72,000 new-home sales in July 2020, an increase of 1.4 percent from 71,000 new-home sales in June.
By product type, conventional loans were 67.2 percent of loan applications, FHA loans 20.6 percent, RHS/USDA loans 1.2 percent and VA loans 11 percent.
The average loan size of new homes increased from $338,589 in June to $345,929 in July.