The Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) showed mortgage applications for new home purchases decreased in September 2021. Not including any adjustment for typical seasonal patterns, the applications decreased by 16.2 percent year-over-year, and by 4 percent month-over-month.
“New home sales purchase activity was weaker in September, and the average loan size rose to another record high, as homebuilders continue to grapple with rising building materials costs and labor shortages,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a release.
According to the BAS, new single-family home sales ran at a seasonally adjusted annual rate of 843,000 units in September 2021, compared with the August pace of 874,000 units (a 3.5 percent decrease). On an unadjusted basis, the association estimated 66,000 new home sales in September, compared with 71,000 the month before (a 7 percent decrease).
“The survey-high average loan size of $408,522 is evidence of higher sales prices from these higher costs, as well as the shift in new construction to larger, more expensive homes,” Kan said. “The estimated pace of new home sales decreased 3.5 percent last month after a strong August reading, but the two-month sales pace is at its strongest since January 2021.”
When broken down by product type, conventional loans composed 75.1 percent of loan applications, Federal Housing Administration loans accounted for 13.9 percent, Department of Veterans Affairs composed 10.5 percent, and Rural Housing Service/United States Department of Agriculture accounted for 0.5 percent. The average loan size increased from $406,922 in August to $408,522 in September.