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Purchase Mortgage Applications For New Homes Fell 12% In June

David Krechevsky
Jul 19, 2022
In this morning’s housing data news, mortgage applications are on the decline again, yet the historically low mortgage rates are remaining relatively steady

Based on data from the Builder Application Survey, new single-family home sales were at a seasonally adjusted annual rate of 620,000 units in June.

Mortgage applications to buy a new home fell 12% in June from a year earlier, according to the latest report from the Mortgage Bankers Association.

The MBA’s Builder Application Survey (BAS) data for June 2022 shows new home purchase loan applications also fell 10% from May, though that does not include any adjustment for typical seasonal patterns.

MBA’s monthly estimate of new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were at a seasonally adjusted annual rate of 620,000 units in June 2022, based on data from the BAS. The new home sales estimate is derived by using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. 

“Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Additionally, new residential construction and permitting activity weakened from March through May, reducing the number of homes available for home buyers. MBA’s estimate of new home sales for June fell to a pace of 620,000 homes, a 15 percent drop of over 100,000 units compared to May.”

The seasonally adjusted estimate for June is a decrease of 14.7% from the May annual pace of 727,000 units, MBA said. On an unadjusted basis, MBA estimates there were 57,000 new home sales in June 2022, down 6.6% from 61,000 new homes sold in May. 

By product type:

  • Conventional loans composed 73.7% of loan applications
  • FHA loans composed 15%
  • RHS/USDA loans composed 0.5%, and 
  • VA loans composed 10.7%. 

The average loan size for new homes decreased from $430,855 in May to $426,966 in June.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this 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 about the types of loans used by new home buyers. 

Official new home sales estimates are conducted monthly by the Census Bureau. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

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