Year-on-year, the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) for June 2021 shows that new home purchase mortgage applications are down 23.8% compared to June 2020. Note that last June, much of the country was under mandate to remain due to the pandemic. Compared to May 2021, the MBA found that purchase requests have decreased by 3%.
MBA estimates that 704,000 seasonally adjusted units sold new single-family homes in June 2021, based on data from BAS. The estimate of new home sales is derived from mortgage app information from the BAS, assumptions about market coverage and other factors.
“Home builders have been facing stronger headwinds recently as sharp price increases for key building materials, rising regulatory costs and labor shortages hamper their ability to increase production. This has dampened new home sales and accelerated home price growth, ”said Joel Kan, Associate VP of Economic and Industry Forecasting at MBA. “In addition, the still low inventory is driving prices up as the competition for available units among potential buyers remains fierce at $ 392,370. In addition to the price increases, we are also seeing fewer purchases in the lower price brackets as more of these potential buyers are being taken out of the market, putting further upward pressure on credit balances. “
The National Association of Home Builders (NAHB) recently appreciated that changes in the price of softwood products between April 17, 2020 and July 8, 2021 increased the price of an average new single family home by $ 29,833 and the market value of an average new apartment building by $ 9,990.
The seasonally adjusted estimate for June mortgage applications is a 5% decrease from 741,000 units in May. On an unadjusted basis, MBA estimates 66,000 new home sales were sold in June 2021, a 2.9% decrease from 68,000 new home sales in May.
“Our estimate of new home sales for June fell to 704,000 units, the lowest annual rate since May 2020,” Kan added. “The average sales pace has remained strong over the past three months at around 738,000, but is still around 7% below the 2020 average. Last year was the strongest year for new home sales in over a decade.”
By product type, conventional loans accounted for 74.4% of loan applications, FHA loans 14.0%, RHS / USDA loans 1.0%, and VA loans 10.6%. The average new home loan amount increased from $ 384,323 in May to $ 392,370 in June.