US New-Home Purchase Mortgage Applications Soar in March

On Tuesday, the Mortgage Bankers Association (MBA) reported that mortgage applications for new-home purchases rose 26% in March from February, according to data from its Builder Application Survey. Applications were up 11% year-over-year. Changes are not seasonally adjusted.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate (SAAR) of 717,000 units in March, a 11.9% increase from the February pace of 641,000 units. On an unadjusted basis, MBA estimates that there were 69,000 sales in March, a 21.1% increase from 57,000 in February.

By product type, conventional loans accounted for 49.1% of applications, FHA loans 36.3%, VA loans 13.4%, and RHS/USDA loans 1.2%. The average loan size decreased from $383,570 in February to $381,938 in March.

Commenting on the report, MBA Vice President and Deputy Chief Economist Joel Kan said,

“Applications for the purchase of newly built homes increased in March, posting monthly and annual gains, and reaching the highest index level since the survey’s inception in 2012. While the index is not adjusted for seasonality, March kicks off the start of spring homebuying season and does typically see an increase in purchase activity. Last month, mortgage rates rose and economic uncertainty increased, and our estimate of new home sales reached its highest level in four months. This growth was supported by higher levels of unsold inventory in many markets across the country, some of which were move-in ready and were relatively more appealing to homebuyers who were eager to purchase a home.

Government applications, which include FHA, VA, and USDA/RHS loans, accounted for more than half of applications received. This was the third consecutive month that the government share of applications was more than 50%. While mortgage rates overall increased in March, rates on FHA mortgages did not increase as quickly as for conforming loans, which supported some of the shift to government loans, as affordability remains a focus for many homebuyers.”