September 2020 New Home Purchase Apps Increased 38 Percent

The Mortgage Bankers Association's Builder Application Survey reported a 38.2% increase in new home purchase mortgage applications from September 2020. However, the MBA points out that this is a 5% decrease from August 2020.

"The strong year-over-year results for non-seasonally adjusted new home sales applications - up 38 percent - and estimated home sales - up 20 percent - are indicative of the fundamental strength seen in the housing market since the spring. Demand for newly built homes is strong, as many buyers appear to seek more space for work, in-home schooling, and leisure," said Joel Kan, MBA's associate vice president of Economic and Industry Forecasting. "However, the moderation in the seasonally adjusted sales pace the last two months could mean that demand has slowed recently - likely because of tight inventory conditions and the slowing improvement in the job market. MBA estimates that September new home sales slowed slightly from August but remained well ahead of 2019's pace."

The MBA also estimates new single-family home sales were running at a seasonally adjusted annual rate of 869,000 units in September 2020, a 0.2% decrease from August's pace of 871,000 units. In terms of product type, the MBA reported that conventional loans composed 71.3% of loans, FHA loans composed 17.8%, RHS/USDA loans composed of 0.8% and VA loans composed of 10.1%, according to the report.

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