Mortgage Applications for New Homes Down Year-Over-Year but Up Month-Over-Month in August

The Mortgage Bankers Association (MBA) reported today (9-20-22) its Builder Application Survey (BAS) data for August 2022. The BAS shows that mortgage applications for new homes purchased in August declined 10.1% year-over-year. When compared to July of 2022, applications increased by 17%. The MBA notes that this change does not include any adjustment for typical seasonal patterns.

MBA estimates new single-family homes sales, which has consistently been a leading indicator of the US Census Bureau’s New Residential Sales report, were running at a seasonally adjusted annual rate of 699,000 units in August 2022. According to the MBA, the new home sales estimate is derived using mortgage application from the BAS, as well as assumptions regarding market coverage and other factors.

Adding additional background and his analysis, MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan said:

“New home purchase applications were down year-over-year but rebounded in August after four consecutive months of declines, despite higher mortgage rates, declining homebuilder sentiment, and looming economic uncertainty. The average loan size decreased for the fourth straight month, which is a sign of slowing home-price growth in the new homes market. Ongoing volatility in mortgage rates in the months ahead may lead to larger swings than is typical in the pace of new home sales. Between moderating sales prices and volatile mortgage rates, buyers seem to be biding their time.

MBA’s estimate of new home sales jumped 18% in August, bringing the sales pace to 699,000 units, which is the strongest pace since May 2022. The current sales pace is still 23% lower than the November 2021 peak and is down 20% from last year.”