Mortgage applications for new homes jumped 20% last month

MBA says conditions should be good news for summer housing market

Mortgage applications for new homes jumped 20% last month

There was a 20.1% year-over-year increase in mortgage applications for new homes in May.

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) revealed a slight increase month-over-month of 0.1%. The figures are not seasonally adjusted.

Based on data from the survey, the MBA estimates that new single-family home sales increased year-over-year to a seasonally adjusted annual rate of 727,000, up slightly from April’s SAAR pace of 722,000.

"Purchase activity strengthened in May, with new home mortgage applications and our estimate of new home sales both showing increases compared to a year ago, at 20% and 15% respectively," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The average loan size for new home applications decreased almost 3%, signaling the ongoing moderation in home prices and a shift to building lower-priced homes."

MBA estimates that there were 69,000 new home sales in May 2019, unchanged from April.

By product type, conventional loans composed 69.4% of loan applications, FHA loans composed 17.9%, RHS/USDA loans composed 0.7% and VA loans composed 12%. The average loan size of new homes decreased from $338,745 in April to $330,311 in May.

“Declining mortgage rates and more new entry-level supply are good news for the housing market this summer,” added Kan.