New Home Purchase Mortgage Applications Declined for the Second Consecutive Month in May, Falling -5.9%

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May New Home Purchase Mortgage Applications Decreased 5.9 Percent

According to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) data for May 2021, mortgage applications for new home purchases decreased -5.9% compared from a year ago. Compared to April 2021, applications decreased by -9%. This change does not include any adjustment for typical seasonal patterns. MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 741,000 units in May 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.

In a statement prepared for the release of the May BAS, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high. Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.” Kan added, “MBA’s estimate of new home sales showed that the seasonally adjusted annualized pace of sales dropped 4 percent in May. Since reaching a survey-high 927,000 units in October 2020, the annual pace of new home sales has now fallen around 20 percent, weighed down by low housing inventory and rising prices.”

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