November New Home Purchase Mortgage Applications Decrease 11 Percent

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WASHINGTON, D.C. (December 13, 2018) — The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for November 2018 shows mortgage applications for new home purchases decreased 11 percent from a year ago. Compared to October 2018, applications declined by 14 percent. This change does not include any adjustment for typical seasonal patterns.

“By our estimates, new home sales fell almost 7 percent in November, and were about 5 percent lower than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite a still-strong job market and recent declines in mortgage rates, affordability challenges continue to hold back sales activity, as wage growth still lags behind home-price growth. Additionally, recent stock market volatility and some economic uncertainty likely also contributed to the pullback in home sales in November.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 627,000 units in November, 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 November is a decrease of 6.8 percent from the October pace of 673,000 units. On an unadjusted basis, MBA estimates that there were 45,000 new home sales in November 2018, a decrease of 15.1 percent from 53,000 new home sales in October.

By product type, conventional loans composed 69.7 percent of loan applications, FHA loans composed 17.3 percent, RHS/USDA loans composed 0.7 percent and VA loans composed 12.3 percent. The average loan size of new homes decreased from $331,732 in October to $326,037 in November.

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.

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