Mortgage applications for new-home purchases increased on a year-over-year basis for the third consecutive month in April. According to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS), mortgage applications increased 4.1% compared with April 2022.
Despite the year-over-year increase, applications decreased by 11% compared with March, according to the MBA.
“[April] was the third straight month of year-over-year growth in applications, which signals improving housing demand for newly built homes at a time when the broader housing market is leaning more on new construction to boost for-sale inventory levels,” says MBA vice president and deputy chief economist Joel Kan. “Mortgage rates have settled in the 6.5% range lately and remain over a percentage point higher than last year. The higher mortgage rate environment continues to factor into home buying and selling decisions.”
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 649,000 units in April, based on data from the BAS. The seasonally adjusted estimate for April is a 2.6% decrease from March’s pace. On an unadjusted basis, the estimated 58,000 new-home sales in April represents a 10.8% decrease from the pace of sales in March.
“Since the brief pickup in new-home sales in January when mortgage rates dipped, the pace of new-home sales has declined for three consecutive months,” Kan says. “With the recently released Census data showing single-family permitting activity on the upswing and housing starts also rising, we expect that to translate to growth in new-home sales activity in the second half of the year.”
According to the MBA, conventional loans composed 66.2% of loan applications in April; FHA loans, 23.4%, VA loans, 10%; and RHS/USDA loans, 0.4%. The average loan size decreased $5,259 from March to $401,756 in April.
MBA’s BAS tracks application volume from mortgage subsidiaries of home builders across the country. Using this data, as well as data from other sources, MBA is able to provide an early estimate of new-home sales volumes at the national, state, and metro level.
