Mortgage applications for the purchase of new homes dropped month-over-month and year-over-year in August, according to Builder Applications Survey data released by the Mortgage Bankers Association (MBA).
Applications decreased by 4.6% compared to August 2017 and declined by 2% compared to July. The monthly change does not include any adjustment for typical seasonal patterns.
Sales of new single-family homes were estimated to be running at a seasonally adjusted annual rate of 669,000 units in August. MBA derives its estimate using mortgage application information from the survey as well as assumptions regarding market coverage and other factors.
"Our seasonally adjusted estimate of new-home sales increased 5% over the month, the second straight monthly increase. Low inventory of homes for sale has been an issue this year, and newly constructed units have been one way to ease the shortage. Growth in August was focused in the lower price tiers. In fact, for the first time in four months, monthly growth was driven by the lower half of the market, based on application size," said Joel Kan, MBA associate vice president of economic and industry forecasting.
MBA’s August seasonally adjusted estimate is an increase from the July pace of 637,000 units. Sales were unchanged from July on an unadjusted basis, with MBA estimating 53,000 new-home sales in August.
Conventional loans composed 71.4% of loan applications, while 15.6% were FHA loans. RHS/USDA loans composed 1.2% and VA loans composed 11.8%. MBA also recorded a decline in the average loan size of new homes to $332,801 in August from $337,775 in July.