New Home Mortgage Applications Drop Both Month-Over-Month and Year-Over-Year in December

According to the Mortgage Bankers Association’s (MBA) December Builder Application Survey (BAS), mortgage applications for new home purchases declined -7.1% year-over-year. Compared to November 2021, applications decreased by 5%. This change does not include any adjustments typical seasonal patterns.

The BAS tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 887,000 units in December 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 December is a decrease of -2% from the November pace of 905,000 units. On an unadjusted basis, MBA estimates that there were 60,000 new home sales in December 2021 — a decrease of -7.7% from 65,000 new home sales in November.

In remarks prepared for the release of the December BAS, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Applications to buy a new home slowed in December, while the activity remained tilted to higher-priced homes. Supply chain challenges, labor shortages, and higher materials costs also contributed to last month’s decline, as projects were delayed or cost more to complete. The average loan size set another survey record at $423,102, as these higher building costs are pushing sales prices higher.”