Mortgage applications were up 10.8 percent in September compared to the previous year, based on data included in the Mortgage Bankers Association (MBA) Builder Application Survey (BAS). This is encouraging following a 6 percent decrease in August applications and a notable decline in credit availability in September, although the change does not account for typical seasonal patterns.
The BAS allows MBA to track application volume from homebuilders’ mortgage subsidiaries across the country. Combined with data from other sources, MBA calculates early estimates of new home sales volumes at the national, state, and metro level, MBA explained in a press release.
“Applications for new home purchases declined in September, consistent with seasonal patterns, and continued to run ahead of last year’s pace,” MBA Vice President and Deputy Chief Economist Joel Kan said in the release. “New home sales continue to be an appealing option for prospective homebuyers as mortgage rates were lower during the month and more newly built options have been coming onto the market. The FHA share of applications was elevated to almost 29 percent, a sign that first-time buyers are active.”
The trade organization estimates new single-family home sales were running at a seasonally adjusted annual rate of 680,000 units in September, based on mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. This figure has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report. Official new home sales estimates are conducted by the Census Bureau on a monthly basis.
On a seasonally adjusted basis, MBA estimates a 12.4 percent decline in units from the August pace of 776,000 units. On an unadjusted basis, MBA estimates a 10 percent decrease from 60,000 new home sales in August to 54,000 in September.
By product type, conventional loans composed 61.2 percent of loan applications, FHA loans composed 28.7 percent, RHS/USDA loans composed 0.4 percent and VA loans composed 9.6 percent. The average loan size for new homes increased from $395,935 in August to $402,658 in September.