July sees new-home purchase apps plummet

by Francis Monfort14 Aug 2017
Mortgage applications for new home purchases fell 12% in July from June, according to Mortgage Bankers Association’s (MBA) Builder Applications Survey.

The month-over-month change does not take into account any adjustment for typical seasonal patterns. On a year-over-year basis, new home purchase mortgage applications rose 5.1%.

"The year-over-year increase in applications to homebuilders for new home purchase mortgages slowed down somewhat in July, after relatively strong showings in May and June," said Lynn Fisher, MBA's vice president of research and economics. "Nonetheless, the pattern of applications over the last three months suggests that housing starts will fall off less than expected during late summer and early fall as demand spills over from the low-inventory existing home market into the market for new homes. Year to date, through July, applications for new homes remain up by more than 7% compared to the same period last year."

In terms of product type, 69.8% of loan applications were for conventional loans. FHA loans made up 15.7%, VA loans comprised 13.3%, and RHS/USDA loans were 1.1% of the total. On average, new home purchase loans were $329,483 in July, an increase from the $327,833 average loan size the month before.

For July, MBA estimates sales at a seasonally adjusted annual rate of 562,000 units. The estimate is a 10.5% decline from the seasonally adjusted rate of 628,000 units in June. MBA estimates an unadjusted rate of 49,000 new home sales during the month, a 10.9% drop from the 55,000 new home sales recorded in the prior month.

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