New-home purchase applications declined on year-over-year and month-over-month bases in June, indicating continued challenges for builders, according to Builder Applications Survey data released by the Mortgage Bankers Association (MBA).
Applications decreased 8.8% compared to June 2017 and slumped 12% from the May level. The monthly change does not include any adjustment for typical seasonal patterns.
"Applications for new-home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5% relative to the first six months of 2017. Our sense is that builders remain constrained by the tight job market for construction labor and rising input costs, particularly lumber costs," said Mike Fratantoni, chief economist and senior vice president of research and industry technology at MBA.
Based on MBA estimates derived from survey data, new single-family home sales were running at a seasonally-adjusted annual rate of 587,000 units in June. This represents a 6.2% decrease from the 626,000 pace in May. On an unadjusted basis, the MBA estimates that there were 53,000 new home sales in June, a decrease of 11.7% from 60,000 new home sales in May.
During the month, 71.3% of all loan applications were for conventional loans. FHA loans accounted for 15.9%, while RHS/USDA loans composed 1.1%. VA loans made up 11.6% of the total. The average loan size of new homes decreased from $337,515 in May to $333,033 in June.
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