Mortgage applications for new home purchases posted a solid increase in May – another sign that the housing market is recuperating from the coronavirus recession.
New-home purchase mortgage requests were 10.9% higher than a year ago, weekly data from the Mortgage Bankers Association Builder Application Survey showed. Compared to April levels, applications spiked 26% after three months of declines.
MBA estimated that new single-family home sales were running at a seasonally adjusted annual pace of 672,000 units in May, up 26.1% from 533,000 units in April. On an unadjusted basis, MBA gauged that new home sales jumped 27.5% month over month, up from 51,000 in April to 65,000 in May.
Conventional loans made up 62.5% of all loan applications. FHA loans composed 24.5%, RHS/USDA loans accounted for 1.2%, and VA loans made up 11.8%. However, the average loan size of new homes dropped from $334,641 to $332,793 month over month.
"Home buyer traffic is rising, and home builders are continuing to ramp up production following the COVID-19 pandemic-related restrictions," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "We expect to see additional near-term strength in the coming months from the resumption of delayed sales activity caused by the social distancing and stay-at-home orders during March and April."