Mortgage applications for new home purchases fell 9% month-on-month in May at a seasonally unadjusted pace – the second straight month of new home sales declined, so Data published on Thursday by the Association of Mortgage Lenders. Compared to last May, MBA’s Builder Application Survey (BAS) found purchases were down 5.9%.
On a seasonally adjusted basis, the MBA also estimates that new home sales fell 4% year-on-year in May, said Joel Kan, associate vice president of Economic and Industry Forecasting for the MBA. Overall, the MBA estimates the sale of new single-family homes in May 2021 at a seasonally adjusted annual rate of 741,000 units.
“Since peaking the survey of 927,000 units in October 2020, the annual pace of new home sales has fallen by around 20 percent, weighed down by low housing stocks and rising prices,” Kan said.
Stock shortages and sultry home prices have become a market norm for much of the industry, and the May loan size data reported the trend is not yet expected to ease. According to BAS, the average loan size rose from $ 377,434 in April to $ 384,000 in May – the fourth straight month of credit growth and a new survey high.
By product type, conventional loans accounted for 743.9% of loan applications, FHA Loans consisted of 14.8%, RHS / USDA Loans came in at around 0.9% and become Loans granted 10.4%.
“Loan balances continue to rise due to a larger share of sales in the upper market segment and increased sales prices due to strong demand and increased building material costs,” said Kan.
About 54% of the homes sold in America in May closed at above list price, according to Redfin, a record.
Housing starts data from the US Statistics Office on Wednesday painted a more hopeful picture of home builders catching up to meet demand for new home rentals. According to the data, the number of housing starts rose 3.6% to 1.57 million in May. That’s more than 50% above the May 2020 rate – when the COVID-19 pandemic peaked in the country – of 1.05 million.
“New build permits are usually a forward-looking indicator of new beginnings, and the housing industry continues to struggle with rising material costs and delayed deliveries from suppliers,” Kan said.
MBA’s BAS uses data from home builder application volume and estimates sales ahead of the official new home sales published each month by the US Censes Bureau. New home sales are recorded in this data when the contract is signed, which is typically done with the mortgage application. The official May home sales report is expected to be released on Wednesday June 23rd.