New Home Purchase Mortgage Applications Drop Month-Over-Month & Year-Over-Year in April 2022

According to the April Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS), mortgage applications for new home purchases declined -10.6% year-over-year. Compared to March 2022, applications decreased by -14.0%. 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 701,000 units in April 2022, 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 April is a decrease of -6.8% from the March pace of 752,000 units. On an unadjusted basis, MBA estimates that there were 65,000 new home sales in April 2022, a decrease of -12.2% from 74,000 new home sales in March.

In a statement prepared to accompany the release of the April BAS, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said:

“New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines. With the supply of existing homes on the market still at extremely low levels, the new home market is an important source of housing supply. However, the pace of construction has slowed in recent months. MBA’s estimate of new home sales declined for the fifth consecutive month to 701,000 units, the slowest sales pace since May 2020.

The average loan size increased to a new survey high of $436,576, and over half of applications were for loan amounts greater than $400,000. Higher rates and sales prices and larger loan sizes are eroding housing affordability and pricing some buyers out of the market.”