New Home Purchase Apps Drop YoY

According to the Mortgage Bankers Association's Builder Application Survey (BAS), data for January 2022 shows mortgage applications for new home purchases decreased 12.5% compared to January 2021. Compared to December 2021, applications increased overall by 10% month-over-month. This change does not include any seasonally adjusted patterns.

"Purchase applications for new homes fell on an annual basis in January, but the 10 percent monthly gain is a positive sign to start the year. While homebuyer demand remains strong, purchase activity is being constrained by higher prices and building delays due to supply-chain pressures and building materials shortages," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "MBA's estimate of new home sales fell in January to its slowest annual pace since July 2021. Purchase activity for new homes continues to be concentrated in the higher end of the market and overall sales prices continue to increase, as evidenced by another record-setting month for the average loan size at $427,000."

The MBA estimates new single-family home sales were moving at a seasonally adjusted annual rate of 821,000 units in January 2022, 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 January is a slight decrease of 7.4% from the December pace of 887,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new home sales in January 2022, an increase of 10% from 60,000 new home sales in December.

By product type, conventional loans composed an estimated 77.0% of loan applications, FHA loans composed 13.0%, RHS/USDA loans composed 0.5%, and VA loans composed 9.5%. The average loan size of new homes increased from $423,102 in December to $426,954 in January.

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 monthly by the Census Bureau. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.