MBA expects new home sales to decline further

The Mortgage Bankers Association (MBA) predicts a further decline in new home sales. The Association’s May Builders’ Requests Survey (BAS) found a 5.9% drop in mortgage applications for the purchase of a new home from the previous year. Compared to April 2021, requests are down 9%. This change does not include any adjustment for typical seasonal trends.

Based on application data, MBA estimates that sales of new single-family homes were at a seasonally adjusted annual rate of 741,000 units in May. This estimate is 3.8% lower than the April annual rate of 770,000 units. On an unadjusted basis, MBA estimates that there were 68,000 new home sales in May 2021, down 5.6% from 72,000 new home sales in April.

“Mortgage applications for the purchase of a new home fell in May for the second consecutive month, while the average loan amount, at $ 384,000, increased for the fourth consecutive month and reached a new summit as part of an investigation, ”said Joel Kan, associate vice president of MBA and industry forecasting. “Loan balances continue to increase due to a greater share of sales in the upper end of the market, as well as increased sales prices due to high demand and high costs of building materials. ”

Add Kan, “The MBA estimate of new home sales showed that the seasonally adjusted annualized sales pace fell 4 percent in May. Since peaking at 927,000 units in October 2020 , the annual pace of sales has now fallen about 20 percent, weighed down by weak housing inventories and rising prices.

Applications for conventional loans represented 73.9% of the total and FHA loans a share of 14.8%. RHS / USDA loans and VA loans accounted for 0.9% and 10.4% respectively. The average loan amount for new homes rose from $ 377,434 in April to $ 384,323 in May.

The MBA Builders’ Applications Survey tracks the volume of applications from mortgage affiliates of home builders across the country. Using this data, along with data from other sources, MBA provides an early estimate of new home sales volumes at the national, state and metropolitan level. These data also provide information on the types of loans used by new home buyers. Official estimates of new home sales are released monthly by the Census Bureau. In these data, new home sales are recorded at the signing of the contract, which usually coincides with the mortgage loan application. The Census Bureau will release its May report on June 23.

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