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New Home Purchase Mortgage Apps Drop 12% in April

NationalMortgageProfessional.com
May 18, 2020
Photo credit: Getty Images/sculpies

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for April 2020 shows that new-home-purchase mortgage applications decreased 12% year-over-year. Compared to March 2020, applications decreased by 25%. This change does not include any adjustment for typical seasonal patterns.
 
“New home purchase applications severely weakened in April, which coincided with the peak of the social distancing efforts and restrictions on non-essential activities to help slow the spread of COVID-19,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “MBA estimates that new home sales dropped to an annualized pace of 533,000 units–the slowest since December 2016. This decline was in line with data from our Weekly Applications Survey, which indicated a pullback in March and most of April.”
 
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 April is a decrease of 23.5% from the March pace of 697,000 units. On an unadjusted basis, MBA estimates that there were 51,000 new home sales in April 2020, a decrease of 28.2% from 71,000 new home sales in March.
 
“There’s evidence now that unrealized, pent-up demand is being released as states start to re-open,” said Kan. “We expect that heading into the summer, more prospective homebuyers will gradually return to the market.”
 
By product type, conventional loans composed 62% of loan applications; FHA loans 23.3%, RHS/USDA loans 1.2%. and VA loans 13.5%. The average loan size of new homes decreased from $344,556 in March to $334,641 in April.

 
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