According to the Mortgage Bankers Association's [1] Builder Application Survey [2] (BAS), data for February 2022 shows mortgage applications for new home purchases decreased by 1%, but on a year-over-year basis applications are down 3.8%.
The survey indicated that even though home sales have declined for the third month in a row, it can be explained that it mirrors a rise in mortgage rates, which puts a weight on purchase activity,.
"New home purchase activity slowed in February, as for-sale inventories remained tight, and mortgage rates increased to their highest levels since 2019. February is typically the start of the spring home buying season, but applications to purchase a new home were down on a monthly and annual basis," said Joel Kan [3], MBA's Associate Vice President of Economic and Industry Forecasting. "MBA estimates that new home sales declined for the third consecutive month, hitting the lowest sales pace in seven months at 791,000 units. Over the last three months, mortgage rates have increased over 70 basis points, and combined with elevated sales prices, that is putting a weight on purchase activity. The decline in activity was also consistent with somewhat weaker homebuilder sentiment and increased uncertainty for the industry as the crisis in Ukraine has worsened the situation for building material prices and availability."
The MBA estimates new single-family home sales were moving at a seasonally adjusted annual rate of 791,000, down from the 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.
According to the report, the seasonally adjusted estimate for February is a decrease of 3.7% from the January pace of 821,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new home sales in February 2022, unchanged from the new home sales level in January.
In addition, it found that the average loan amount for the month reached $432,359, a new high. It also found that conventional loans made up 76.9% of all loan applications, FHA loans consisted of 12.9%, VA loans were 9.9% and USDA was 0.3% of total loans.