New Home Purchase Applications Down in September as Loan Size Rises

Mortgage applications for new home purchases decreased 16.2% YoY. Compared to August 2021, applications decreased by 4%., according to the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for September 2021. This change does not include any adjustment for typical seasonal patterns.

Key details:

MBA predicts new single-family home sales were running at a seasonally adjusted annual rate of 843,000 units in September 2021, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for September shows a decrease of 3.5% from the August pace of 874,000 units. Unadjusted, MBA predicts there were 66,000 new home sales in September 2021—down 7% from 71,000 new home sales in August.

By product type:

– Conventional loans composed 75.1% of loan applications
– FHA loans composed 13.9%
– RHS/USDA loans composed 0.5%
– VA loans composed 10.5%

The average loan size of new homes increased from $406,922 in August to $408,522 in September.

The takeaway:

“New home sales purchase activity was weaker in September, and the average loan size rose to another record high, as homebuilders continue to grapple with rising building materials costs and labor shortages. The survey-high average loan size of $408,522 is evidence of higher sales prices from these higher costs, as well as the shift in new construction to larger, more expensive homes,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, in a statement. “The estimated pace of new home sales decreased 3.5% last month after a strong August reading, but the two-month sales pace is at its strongest since January 2021.”

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