New Home Mortgage Applications Decline 17% Year-Over-Year in August

The Mortgage Bankers Association (MBA) today (9-21-21) announced the results of their Builder Application Survey (BAS) data for August 2021. The BAS reveals that mortgage applications for new home purchases decreased -17% from August 2020. However, month-over-month (July 2021 to August 2021) applications increased by 9%. The changes reported do not include any adjustment for typical seasonal patterns.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 874,000 units in August 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 August is an increase of 12.2% from the July pace of 779,000 units. On an unadjusted basis, MBA estimates that there were 71,000 new home sales in August 2021, an increase of 10.9% from 64,000 new home sales in July.

In a statement prepared to accompany the release of the BAS, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Mortgage applications to purchase new homes were down in August compared to 2020’s late summer surge, but both mortgage applications and MBA’s estimate of new home sales jumped last month compared to July. While the new home construction market is a much smaller segment of the overall housing market, prospective buyers are increasingly turning to new homes because of the very low levels of existing homes for sale. Last month’s non-seasonally adjusted 9 percent increase in applications is an indication of greater than expected strength in demand, given that summer’s end is typically a slower period for new home purchases.”

Kan added, “On a seasonally adjusted basis, new home sales jumped 12 percent in August to 874,000 units — the fastest pace of sales since January 2021. This is consistent with improving homebuilder sentiment, as lumber prices continue to ease and demand for new homes remains strong. However, higher costs for materials, delivery delays, and growing labor shortages continue to pose as challenges and are ultimately pushing sales prices higher. The average loan size set another survey record at $406,922, and the share of loan applications for amounts greater than $400,000 accounted for over 40 percent of all applications, up from 28 percent a year ago.”