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New Home Mortgage Applications Rebound In January 

David Krechevsky
Feb 17, 2023
MBA & Census Bureau Estimate of New Home Sales 0223

Increase attributed to seasonal patterns and lower mortgage rates.

  • Applications increased 43% from December, but were still 3.5% below a year earlier.
  • The average loan size of new homes increased from $399,555 in December to $401,631 in January.

Mortgage applications to buy new homes rebounded in January, rising 42% from December, according to the latest report from the Mortgage Bankers Association (MBA).

The MBA’s Builder Application Survey (BAS) data for January, released Friday, also showed that such applications were still 3.5% below the level from a year earlier. The MBA added that the increase from December does not include any adjustment for typical seasonal patterns.

“Applications for new home purchases increased in January, driven by typical seasonal patterns and lower mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 30-year fixed rate declined almost 40 basis points over the month and this stirred some homebuyers to act, especially those who might have delayed their purchase when mortgage rates were higher.”

Kan said the MBA’s estimate of seasonally adjusted new home sales was also up robustly, seeing a 13% gain in the sales pace. “However,” he continued, “activity was still 12% behind last year’s pace, when mortgage rates were over 2 percentage points lower. January was also a strong month for single-family housing completions, according to the U.S. Census Bureau. Home builders may have offered additional incentives to sell some of their inventory after last year’s slowdown in sales.”

Kan added, “Home builders have reported improved sentiment in the last two months according to the NAHB’s HMI release, but Census data on January new residential construction showed that single-family housing starts and permitting activity have not picked up yet. Additionally, homebuyers remain sensitive to mortgage rates, which have trended higher in recent weeks and could delay a potential turning point in the housing market.”

The MBA estimated that new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, were running at a seasonally adjusted annual rate of 725,000 units in January 2023, 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 MBA said.

The seasonally adjusted estimate for January is an increase of 13.1% from the December pace of 641,000 units. Unadjusted, the MBA estimates that there were 63,000 new home sales in January 2023, an increase of 40% from 45,000 new home sales in December. 

By product type:

  • conventional loans composed 68.4% of loan applications; 
  • FHA loans composed 20.3% of applications;
  • RHS/USDA loans composed 0.3% of applications; and 
  • VA loans composed 11 percent. 

The average loan size of new homes increased from $399,555 in December to $401,631 in January, the MBA said.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using that and data from other sources, MBA provided 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 is typically coincident with the mortgage application.

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