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New home purchase mortgage applications increased by 54.1% compared to one year ago, according to the Mortgage Bankers Association's Builder Application Survey. Compared to May 2020, applications increased by 20%.
According to the report from the MBA, it is estimated that new single-family home sales were running at a seasonally adjusted annual rate of 774,000 units in June 2020. The MBA also estimated there were 71,000 new home sales in June 2020 on an unadjusted basis.
"The new home purchase market continues to recover - applications surged 20% in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50% from last June further reinforces that point," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "MBA estimates that new home sales in June increased 15% ... which would be the strongest level of activity since January 2020."
Kan also expects new home construction to speed up in order to meet the increased demand. He believes the sustainability of the upward trend hinges on a rapid increase in supply.
Conventional loans made up 65.1% of loan applications, Federal Housing Administration loans made up 22.6%, RHS/USDA loans made up 1% and VA loans made up 11.2%. The average loan size of new homes also increased to $338,589 in June, a $5,796 increase from May.
Read the full mortgage application report.