The Mortgage Leader

December New Home Purchase Mortgage Applications Decreased 6.1 Percent

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WASHINGTON, D.C. (January 17, 2019) — The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for December 2018 shows mortgage applications for new home purchases decreased 6.1 percent from a year ago. Compared to November 2018, applications decreased by 13 percent. This change does not include any adjustment for typical seasonal patterns.

“New home sales declined for the second straight month in December, from 627,000 units to 552,000 units, as factors such as a volatile stock market and economic uncertainty, both here and abroad, likely kept some prospective buyers away,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “This pullback in activity was in spite of falling mortgage rates and a robust job market. Looking ahead, if mortgage rates remain low, housing inventory rises, and home-price growth continues to steady, we expect to see a rebound in purchase activity this spring.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 552,000 units in December, 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 December is a decrease of 12 percent from the November pace of 627,000 units. On an unadjusted basis, MBA estimates that there were 37,000 new home sales in December 2018, a decrease of 17.8 percent from 45,000 new home sales in November.

By product type, conventional loans composed 69.5 percent of loan applications, FHA loans composed 17.3 percent, RHS/USDA loans composed 0.7 percent and VA loans composed 12.5 percent. The average loan size of new homes increased from $326,037 in November to $334,944 in December.

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 Applications Survey, please click here.

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