August New Home Purchase Mortgage Applications Increased 33.3 Percent

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WASHINGTON, D.C. (September 15, 2020) — The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2020 shows mortgage applications for new home purchases increased 33.3 percent compared from a year ago. Compared to July 2020, applications decreased by 4 percent. This change does not include any adjustment for typical seasonal patterns.

“The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite economic uncertainty and the pandemic’s distortion to typical seasonal patterns, the comparisons to August 2019 show strength. Purchase applications increased over 33 percent, and MBA’s estimate of new home sales were up over 11 percent. The seasonally adjusted annualized rate of sales was 871,000 units in August, the second strongest of the year and well above the 785,000 units sold a year ago.”

Added Kan, “The new home market has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.”

MBA’s chart in this months’ release shows the BAS estimate of new home sales in the blue bars against the U.S. Census Bureau series. The yellow line represents the revised/final estimates for the seasonally adjusted annualized rate, while the red line shows the initial Census estimates for May through July. MBA’s series, typically released a week or two in advance of the Census release, has thus far proven to be an accurate leading indicator of new home sales.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 871,000 units in August 2020, 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 August is a decrease of 2.1 percent from the July pace of 890,000 units. On an unadjusted basis, MBA estimates that there were 68,000 new home sales in August 2020, a decrease of 5.6 percent from 72,000 new home sales in July.

By product type, conventional loans composed 69.1 percent of loan applications, FHA loans composed 19.2 percent, RHS/USDA loans composed 1.1 percent and VA loans composed 10.5 percent. The average loan size of new homes increased from $345,929 in July to $348,576 in August.

MBA’s Builder Application Survey 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. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

For additional information on MBA’s Builder Application Survey, please click here.

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