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The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for October 2014 shows mortgage applications for new home purchases increased by eight percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns. By product type, conventional loans composed 68.2 percent of loan applications, FHA loans composed 16.2 percent, RHS/USDA loans composed 1.5 percent and VA loans composed 14.2 percent. The average loan size of new homes increased from $298,274 in September to $300,289 in October.
“Applications for new home purchases picked up in October, particularly for higher priced homes,” said Mike Fratantoni, MBA’s chief economist. “The continued improvement in the job market and still low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level.”
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 461,000 units in October 2014, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
The seasonally adjusted estimate for October is an increase of 8.5 percent from the September pace of 425,000 units. On an unadjusted basis, the MBA estimates that there were 36,000 new home sales in October 2014, an increase of 12.5 percent from 32,000 new home sales in September.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. 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 is typically coincident with the mortgage application.