New-home purchase apps slip in May

Rising lumber costs, wages keep homebuilders from meeting demand

New-home purchase apps slip in May

Applications for new home purchase mortgages declined on both a monthly and annual basis in May as homebuilders failed to keep up with demand, according to Builder Application Survey data released by the Mortgage Bankers Association (MBA).

Mortgage applications for new home purchases slipped 0.5% during the month from the year-ago level and decreased 4% from April. The month-over-month change does not include any adjustment for typical seasonal patterns.

"Despite strong demand, builders have not been able to ramp up the supply of new homes, as they face rising costs from key inputs such as lumber and having to raise wages to fill open positions," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "Additionally, our estimate of new home sales declined in May, reaching its lowest level since December 2017."

During the month, conventional loans accounted for the largest share of loan applications by product type at 71.1% of total activity. FHA loans composed 15.8%, and RHS/USDA loans made up 1%. VA loans composed 12.1%.

The period also saw an increase in the average loan size for new homes to $337,515 from $336,870 in April.

New single-family home sales were running at a seasonally adjusted annual rate of 626,000 units in May, according to MBA estimates. The seasonally adjusted estimate is a decrease of 4.6% from the April pace of 656,000 units. On an unadjusted basis, the MBA estimates that there were 60,000 new-home sales in May, a decrease of 4.8% from 63,000 new-home sales in April.

 

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