Mortgage applications for new home purchases rose by 10.9% year over year in May, as well was 26% month over month, according to the Mortgage Bankers Association’s Builder Application Survey for May. This change does not include any adjustment for seasonal patterns.
“The solid increase in new home purchase applications in May is another indication of a recovery in the housing market. MBA estimates that new home sales rebounded 26% last month—a healthy turnaround after three months of declines,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Home buyer traffic is rising, and home builders are continuing to ramp up production following the COVID-19 pandemic-related restrictions. We expect to see additional near-term strength in the coming months from the resumption of delayed sales activity caused by the social distancing and stay-at-home orders during March and April.”
MBA estimates that new single-family homes sold at a seasonally adjusted annual rate of 672,000 units as of May 2020, according to BAS data on mortgage applications and market coverage. This seasonally adjusted estimate marks a 26.1% increase from April’s 533,000 units.
On an unadjusted basis, MBA estimates that there were 65,000 new home sales in May, up 27.5% from 51,000 new home sales in April.
The average loan size for new homes fell from $334,641 in April to $332,793 in May. Conventional loans comprised 62.5% of loan applications, while FHA loans comprised 24.5%, RHA/USDA loans comprised 1.2%, and VA loans comprised 11.8%.
