Mortgage applications to buy new homes increased slightly in November from a month earlier, but were still down 25.2% from a year earlier, the Mortgage Bankers Association (MBA) said Tuesday.
The MBA’s Builder Application Survey (BAS) data for November 2022 found that applications increased by 1% from October. The result does not include any adjustment for typical seasonal patterns.
By product type, conventional loans comprised 67.6% of loan applications in November; FHA loans comprised 21.3%; VA loans made up 10.9%; and USDA loans made up 0.2%. The average loan size for new homes decreased 2% to $392,465 in November from $400,616 in October.
“New home purchase applications recovered slightly in November, as mortgage rates retreated from their October highs and brought some prospective buyers back into a market that still faces affordability challenges,” said Joel Kan, MBA’s vice president and deputy chief economist. “Similarly, estimated new home sales for November saw an annual pace of 660,000 units — a 10% increase from October.”
While mortgage rates remain high compared to the past few years, Kan said, the 30-year fixed rate was 6.49% at the end of November after reaching 7.16% in mid-October, “providing a slight boost in purchasing power for buyers. However, both applications and sales remained over 20% below last year’s pace.”
He added, “Reflecting the slowdown at the upper end of the market, the average loan size on new home purchase applications was $392,465, the lowest since June 2021.”
The MBA estimated new single-family home sales — which have consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report — at a seasonally adjusted annual rate of 660,000 units in November, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions about market coverage and other factors.
The seasonally adjusted estimate for new single-family home sales in November is an increase of 10.4% from the October pace of 598,000 units. On an unadjusted basis, MBA estimated there were 49,000 new home sales in November, an increase of 4.3% from 47,000 a month earlier.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using that data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state, and metro level. The 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 typically coincides with the mortgage application.
