
August New Home Purchase Mortgage Applications Fell 17% YOY

MBA says prospective buyers turning to new homes due to lack of inventory for existing homes
- Seasonally adjusted increase of 9% from July shows greater than expected strength in demand.
Mortgage applications for new home purchases in August decreased 17% from the same month last year, but increased by 9% from July, the Mortgage Bankers Association (MBA) reported today.
The MBA said its Builder Application Survey (BAS) data for August 2021 does not include any adjustments for typical seasonal patterns.
Joel Kan, MBA's associate vice president of economic and industry forecasting said that while “the new home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale.”
He said August’s non-seasonally adjusted 9% increase in applications from July is indicates “greater than expected strength in demand, given that summer's end is typically a slower period for new home purchases."
Kan said that, when adjusted for seasonal variations, new home sales jumped 12% in August to 874,000 units, the fastest pace of sales since January 2021.
“This is consistent with improving homebuilder sentiment, as lumber prices continue to ease and demand for new homes remains strong,” he said. “However, higher costs for materials, delivery delays, and growing labor shortages continue to pose … challenges and are ultimately pushing sales prices higher.”
He said the average loan size set another survey record. at $406,922, and the share of loan applications for amounts greater than $400,000 accounted for over 40% of all applications, up from 28% a year earlier.
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 874,000 units in August, 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 August is an increase of 12.2% from the July pace of 779,000 units. On an unadjusted basis, MBA estimates that there were 71,000 new home sales in August 2021, an increase of 10.9% from 64,000 new home sales in July.