Mortgage applications for new homes fell 9% from January to February, but total applications for home builders are still up 9.2% year-on-year, according to the latest data report of the Mortgage Bankers Association.
MBA’s Home Ownership Survey found that new single-family homes sold at a seasonally adjusted annual rate of 748,000 units in February 2021 – a decrease of 17.3% from the January pace of 905,000 units and the slowest annual rate since May 2020.
Overall, MBA estimated there were 65,000 new home sales in February 2021, compared to 69,000 new home sales in January.
As has been the case for about a full calendar year, sky-high prices for building materials and thus more expensive new houses are keeping some buyers in check. Joel Kan, vice president of economic and industrial forecasting at MBA, said supply and demand imbalances are likely to create “bottlenecks” for home builders.
“The conventional rate of applications hit a new high as overall residential inventories remain extremely low and house prices rise,” he said. “Builders continue to face rising input costs and a lack of available land, causing them to slow down production.”
Conventional loans accounted for 74% of loan applications in February, according to the report. The FHA loans were 15.4%, the RHS / USDA loans were 1.5%, and the VA loans were 9%. The average new home loan size increased from $ 363,493 in January to $ 370,679 in February.
Even before the pandemicHousing stocks had hit record lows and the problem has worsened as demand continues to rise. A December report from Homesnap showed a total of new entries elevated 0.22% from 2019, while total sales increased 19.29% – an imbalance that has depleted the housing stock.
Better times could come, however, as several COVID-19 vaccines continue to circulate among the population. That should send more people back to work – including home builders and wood mill workers, whose work was stopped in early 2020 for health reasons crippled the housing industry.
Additional stimulus checks from President Joseph Biden American rescue plan should land in consumers’ bank accounts within the month, further stimulating the economy and encouraging potential homebuyers to potentially place an offer or deposit. However, Mortgage rates steadily climb back over 3% after a record year of lows.