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Mortgage Applications For New Home Purchases Drop 23.8% 

Katie Jensen
Jul 21, 2021

Applications for new home purchases fell for the third consecutive month.

KEY TAKEAWAYS
  • Mortgage applications for new home purchases decreased 23.8% compared to last year.
  • Compared to a month earlier, applications decreased 3% on an unadjusted basis.
  • New single-family home sales were running at an annual rate of 704,000 units in June 2021, 5% lower than the previous month.
  • Fewer purchase transactions in the lower price tiers as more of these potential buyers are being priced out of the market.

Mortgage applications for new home purchases decreased 23.8% compared to last year, according to Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) data for June 2021. Compared to a month earlier, applications decreased 3% on an unadjusted basis. 

"Our estimate of new home sales in June dropped to its lowest annual pace since May 2020 at 704,000 units,” said Joel Kan, MBA's associate vice president of economic and industry forecasting. “The average pace of sales has remained strong at around 738,000 for the past three months, but it is still around 7 percent lower than the average for 2020. Last year was the strongest year for new home sales in over a decade."

The BAS estimates new single-family home sales were running at an seasonally adjusted annual rate of 704,000 units in June 2021. That is a decrease of 5% from May’s pace of 741,000 units. 

Broken down by loan type, conventional loans composed 4.4% of loan applications, FHA loans composed 14%, RHS/USDA loans composed 1%, and VA loans composed 10.6%. The average loan size for new homes increased from $384,323 in May to $392,370 in June.

Kan also mentioned that homebuilders have not had it easy, facing severe price increases for building materials, rising regulatory costs, and labor shortages. The result has been fewer new home sales and rapid home-price growth. 

Kan stated, “Applications for new home purchases fell for the third consecutive month, while the average loan amount surged to another record high at $392,370. In addition to price increases, we are also seeing fewer purchase transactions in the lower price tiers as more of these potential buyers are being priced out of the market, further exerting upward pressure on loan balances." 

For additional information on MBA's Builder Application Survey, please click here.

 

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