June New Home Purchase Mortgage Applications Up 54 Percent
August 26, 2020
The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2020 shows mortgage applications for new home purchases increased 54.1 percent compared from a year ago. Compared to May 2020, applications increased by 20 percent. This change does not include any adjustment for typical seasonal patterns.
“The new home purchase market continues to recover – applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50 percent from last June further reinforces that point,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “MBA estimates that new home sales in June increased 15 percent to a seasonally adjusted pace of 774,000 units – which would be the strongest level of activity since January 2020.”
Added Kan, “We do anticipate that new home construction will speed up to attempt to better meet demand. However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”
Estimating the Housing Market
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 774,000 units in June 2020, 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 an increase of 15.2 percent from the May pace of 672,000 units. On an unadjusted basis, MBA estimates that there were 71,000 new home sales in June 2020, an increase of 9.2 percent from 65,000 new home sales in May.
By product type, conventional loans composed 65.1 percent of loan applications, FHA loans composed 22.6 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 11.2 percent. The average loan size of new homes increased from $332,793 in May to $338,589 in June.
Housing App Survey
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 is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This 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.