Mortgage Applications for New US Home Purchases Decline 3% in December

On Friday, the Mortgage Bankers Association (MBA) reported that mortgage applications for new-home purchases rose 8.9% year-over-year in December, according to its Builder Application Survey (BAS). However, on a monthly basis, applications declined 3%, unadjusted for typical seasonal patterns.

MBA estimates that new single-family home sales in December were running at a seasonally adjusted annual rate of 601,000 units, down 15.7% from November’s pace of 713,000 units. On an unadjusted basis, MBA estimates 46,000 new-home sales for December, a 6.1% decline from 49,000 in November.

By product type, conventional loans composed 60.1% of loan applications; FHA loans composed 29.4%; RHS/USDA loans composed 0.5%; and VA loans composed 9.9%. The average loan size for new homes decreased from $402,873 in November to $400,930 in December.

In remarks accompanying the report, MBA Vice President and Deputy Chief Economist Joel Kan said:

“Applications for newly built homes increased 9% compared to a year ago in December, while the FHA share of applications reached its second highest level in the survey’s history at 29%. First-time homebuyers remained active in the new home segment, as existing inventory for starter homes remains tight. The monthly decrease in applications was consistent with typical seasonal patterns. MBA’s estimate of seasonally adjusted new home sales fell in December but remained slightly above last year’s sales pace.”