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March New Home Mortgage Applications Down 5%

Keith Griffin
Apr 14, 2022
New home construction

Regardless of new or existing, data shows loan averages hitting record peaks

KEY TAKEAWAYS
  • MBA’s estimate of new home sales declined for the fourth consecutive month
  • Mortgage applications for new home purchases in March 2022 decreased 5%
  • The average loan size continued to set record highs and reached $436,151

Mortgage applications for new home purchases in March 2022 decreased 5% compared to a year ago, according to the Mortgage Bankers Association Builder Application Survey (BAS) data released today. Interest in new homes is strong and compared to February 2022 applications increased by 10%, but existing home supply remains tight.

Regardless if a home is new or from existing supply, more and more money is needed to pay for it. The MBA says average loan sizes continue to hit record peaks.

“Mortgage applications for new home purchases increased in March, which is consistent with typical seasonal trends and a sign of the strong underlying demand for housing,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Potential buyers have increasingly looked to new homes as an option, given the lack of existing homes for sale. The average loan size continued to set record highs and reached $436,151. Growth in applications for larger loans continued to dominate application activity.”

Added Kan, “MBA’s estimate of new home sales declined for the fourth consecutive month, with activity down 5% compared to February. Elevated home prices, rapidly increasing mortgage rates, and higher costs and supply shortages for building materials are all affecting sales growth.”

As NationalMortgageProfesssional.com reported yesterday, mortgage applications have fallen for 12 straight weeks. The last time mortgage applications increased from the previous week in the MBA’s survey was the week ending Jan.14, 2022.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 752,000 units in March 2022, 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 March is a decrease of 4.9% from the February pace of 791,000 units. On an unadjusted basis, MBA estimates that there were 74,000 new home sales in March 2022, an increase of 12.1% from 66,000 new home sales in February. 

By product type, conventional loans composed 76.6% of loan applications, FHA loans composed 13.0%, RHS/USDA loans composed 0.2% and VA loans composed 10.2%. The average loan size of new homes increased from $432,359 in February to $436,151 in March.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This 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 is typically coincident with the mortgage application. 

For additional information on MBA’s Builder Application Survey, click here

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