Mortgage Applications for New Home Purchases Down in May

Mortgage applications for new home purchases in May was down by 4.5% compared to one year ago, according to data from the Mortgage Bankers Association (MBA). On a month-over-month basis, applications decreased by 9%.

MBA estimated that new single-family home sales were running at a seasonally adjusted annual rate of 631,000 units in May, down 12.1% from the April pace of 718,000 units. On an unadjusted basis, MBA estimated that there were 58,000 new home sales in last month, a 10% decrease from 65,000 new home sales in April.

The average loan size for new homes increased from $376,992 in April to $379,209 in May. By product type, conventional loans composed 47.3% of loan applications, FHA loans composed 37.8%, VA loans composed 13.8% and RHS/USDA loans composed 1.0%.

“Economic uncertainty, rising mortgage rates, and increasing competition from growing existing-home sales inventory likely dampened overall demand for new home purchases in May,” said Joel Kan, MBA’s vice president and deputy chief economist. “Applications to purchase newly built homes fell to their slowest pace in three months as buyers held off on their purchase decisions. Estimated new home sales posted a 12% drop, reversing April’s large gain and closer to levels seen earlier in the year.”