Record-low mortgage rates and high demand for homes with more space will likely continue to drive this trend into the fall
The new home purchase market has done well despite economic uncertainty and the pandemic's distortion to typical seasonal patterns, according to the Mortgage Bankers Association.
There was a 33.3% year-over-year spike in mortgage applications for the purchase of new homes in August, data from MBA's Builder Application Survey (BAS) showed. The association estimated that single-family new home sales were running at a seasonally adjusted pace of 871,000 units last month.
"The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "Purchase applications increased over 33%, and MBA's estimate of new home sales were up over 11%. The seasonally adjusted annualized rate of sales was 871,000 units in August, the second strongest of the year and well above the 785,000 units sold a year ago."
By product type, conventional loans accounted for 69.1% of loan applications, FHA loans composed 19.2%, while VA loans made up 10.5%. RHS/USDA loans made up 1.1% of all applications. August loan sizes averaged $348,576, down from the $345,929 average in July.
Month over month, new home sales dipped by 2.1% (seasonally adjusted) from the July pace of 890,000 units. Unadjusted, there were an estimated 68,000 new home sales in August, down 5.6% from a 72,000-unit rate in July.
The housing market has continued its steady progress throughout the summer homebuying season, "and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall," Kan said.