New-home purchase apps decline annually in October

MBA says signs indicate some additional inventory in the new home market

New-home purchase apps decline annually in October

Mortgage applications for new-home purchases decreased by 2.1% in October from a year ago but increased by 11% from September, according to Builder Application Survey data released by the Mortgage Bankers Association (MBA).

The monthly change does not include any adjustment for typical seasonal patterns.

"While we have seen some monthly swings in new home sales in 2018, the year-to-date average sales pace is around 7% higher than the same period in 2017. Additionally, the average loan size for a new-home purchase application, at around $332,000, was at its lowest since July 2017. This is potentially a sign that there has been some additional inventory in the new-home market, and that the rapid price growth in some geographies is starting to ease," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 673,000 units in October. The seasonally adjusted estimate is an increase of 4.7% from the September pace of 643,000 units.

On an unadjusted basis, MBA estimates that there were 53,000 new-home sales in October, an increase of 6% from 50,000 new home sales in September.

During the month, conventional loans composed 70.9% of loan applications. FHA loans accounted for 17.1%, RHS/USDA loans composed 0.7%, and VA loans made up 11.2%. The average loan size for new homes decreased from $333,086 in September to $331,732 in October.