The Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) showed mortgage applications for new homes decreased in May 2021. Not including any adjustment for typical seasonal patterns, the applications decreased by 5.9 percent year-over-year, and by 9 percent month-over-month.
“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” Joel Kan, MBA associate vice president of economic and industry forecasting, said in a release. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”
According to the BAS, new single-family home sales reached a seasonally adjusted annual rate of 741,000 units in May 2021, compared with the April pace of 770,000. On an unadjusted basis, the association estimated there were 68,000 new home sales in May, compared with 72,000 in the prior month (a 5.6 percent decrease).
“MBA’s estimate of new home sales showed that the seasonally adjusted annualized pace of sales dropped 4 percent in May,” Kan continued. “Since reaching a survey-high 927,000 units in October 2020, the annual pace of new home sales has now fallen around 20 percent, weighed down by low housing inventory and rising prices.”
When broken down by product type, conventional loans composed 73.9 percent of loan applications, Federal Housing Administration loans accounted for 14.8 percent, Department of Veterans Affairs composed 10.4 percent, and Rural Housing Service/United States Department of Agriculture accounted for 0.9 percent. The average loan size increased from $377,434 in April to $384,323 in May.