Mortgage applications for new-home purchases in June decreased 12% compared with a year ago, according to the latest Mortgage Bankers Association (MBA) Builder Application Survey (BAS). Compared with May, applications decreased by 10%.
“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,” says 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% drop of over 100,000 units compared to May.”
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 620,000 units in June, 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 June is a decrease of 14.7% from the May pace of 727,000 units. On an unadjusted basis, MBA estimates that there were 57,000 new-home sales in June, a decrease of 6.6% from 61,000 new-home sales 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 of new homes decreased from $430,855 in May to $426,966 in June.