NAHB analysis of the most recent Census numbers reveals two consecutive quarters of higher market share of FHA-backed mortgages for the new home sale sector. This development comes after a reduction in FHA premiums announced at the start of 2015.
Despite the surprising drop for the pace of new home sales in June (down 6.8%), the strong non-seasonally adjusted sales level for April (revised to 50,000 homes) pushed total sales for the second quarter of 2015 to a post-recession high of 143,000. This is according to data from the Census Bureau’s Quarterly Sales by Price and Financing and NAHB calculations.
New home sales due to FHA-backed loans increased to a quarterly count of 100,000 and a market share of 16% for the second quarter according to the Census numbers. This is higher than the approximate share of 11% from a year prior.
It is worth adopting some caution associated with these estimates. In particular, the statistical error associated with the FHA, cash, and VA sales estimates from this data set are relatively high. This reduces the reliability of measures of short-term market changes.
Mindful of this limitation, the current FHA-share estimate is lower than the 28% share determined for the first quarter of 2010 but is higher than the 10% 2002-2003 average. The FHA share has fallen as the conventional financing share recovered. However, the share increased from 10% to 16% from the end of 2014 to the start of 2015.