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Applications Point to Jump in January New Home Sales

house-graphupMortgage applications for new home purchases surged in January, pointing to a big jump for new home sales.

The Mortgage Bankers Association (MBA) said Thursday that new home purchase applications rose 29 percent from December to January, not including any seasonal adjustments. The group pulled its data from its monthly Builder Application Survey, which tracks application volumes from mortgage subsidiaries of homebuilders.

In a statement, MBA's VP of research and economics, Lynn Fisher, said the increase reflected an improving labor market and lower interest rates.

Going by mortgage application figures and assumptions as far as cash sales and other factors, MBA estimates that new single-family home sales last month were at a seasonally adjusted annualized rate of 530,000, a 29.6 percent increase over the group's December estimate of 409,000.

Unadjusted, MBA says new home sales came in around 39,000 in January, a 39.3 percent jump from December.

In an estimate in late January, the Commerce Department put new home sales at a seasonally adjusted annual rate of 481,000 in December. Revised data, which will be released alongside January's initial estimate for new home sales later this month, will show how close MBA's projections were. The government's revisions in the last year have largely been to the downside.

Conventional mortgage loans accounted for 67.2 percent of new home purchase applications last month, MBA said, slightly down from December. Applications for loans insured by the Federal Housing Administration (FHA) composed 18.2 percent of total volumes, up nearly 3 percentage points month-over-month. A reduction to annual FHA mortgage insurance premiums went into effect January 26, spurring more demand among low- and moderate-income homebuyers, as well as first-time buyers.

The average loan size of new homes fell last month, declining about $7,000 to $304,364.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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