Mortgage Applications Decreased 7.1% for New Home Purchases

The latest Mortgage Bankers Association Builder Application Survey (BAS) for December 2021 shows that mortgage applications for new home purchases dropped 7.1% compared to December 2020. Month-over-month, compared to November 2021, mortgage apps decreased by 5%. This change does not include any adjustment for typical seasonal patterns.

"Applications to buy a new home slowed in December, while the activity remained tilted to higher-priced homes," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "Supply chain challenges, labor shortages, and higher materials costs also contributed to last month's decline, as projects were delayed or cost more to complete. The average loan size set another survey record at $423,102, as these higher building costs are pushing sales prices higher."

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 887,000 units in December 2021, 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 2% from November's pace of 905,000 units. On an unadjusted basis, MBA estimates that there were 60,000 new home sales in December 2021, a decrease of 7.7 % from 65,000 new home sales in November.

By product type, conventional loans composed 77.2% of loan applications, FHA loans composed 12.6%, RHS/USDA loans composed 0.4% and VA loans composed 9.8%. The average loan size of new homes increased from $414,114 in November to $423,102 in December.