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Applications Point to Spike in New Home Sales

A survey of loan application volume from mortgage subsidiaries of homebuilders across the country suggests sales of new homes experienced a substantial leap in January.

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The ""Mortgage Bankers Association's"":http://mba.org/default.htm (MBA) Builder Applications Survey indicates new home sales ran at a seasonally adjusted annual rate of 543,000 last month, reflecting a month-over-month increase of 35 percent.

On an unadjusted basis, the group estimates there were 38,000 new home sales in January, a 36 percent increase over December.

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""While the big jump may appear to conflict with other data, such as MBA's purchase application index and NAR's [the National Association of Realtors'] existing home sales data that point to a weak market for existing homes, our Builder Application Survey estimate is consistent with reports of homebuilder sentiment that show strength in the market for new homes,"" said MBA chief economist Mike Fratantoni.

""It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December,"" he added.

The group also reported a 27 percent (unadjusted) monthly increase in loan applications for new home purchases.

Conventional loans accounted for 69.4 percent of last month's new home applications. Applications for loans insured by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) accounted for 15.9 percent and 13.4 percent, respectively, while applications for mortgages backed by Rural Housing Services or the U.S. Department of Agriculture composed 1.3 percent.

The average loan size of new homes fell to $289,358 last month from $300,444 in December, MBA reported.

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