Home Purchase Mortgage Applications Remained Resilient in July

The Mortgage Bankers Association (MBA) has released the Builder Application Survey (BAS) data for July 2023, which showed mortgage applications for new home purchases increased 35.5% compared from a year ago.

According to the survey, compared to June 2023, applications increased by just 0.2%.

“Applications for purchase loans on newly constructed homes remained strong in July, up 36% annually, as new homes continued to account for a growing share of homes available for sale,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “The FHA share of purchase applications was 24.2%, the highest share since May 2020, and has increased in four of the last five months. FHA purchase loans are a popular option for many first-time homebuyers and this increasing trend in the FHA share is indicative of more first-time buyers looking to new homes as an option, given the lack of for-sale inventory among existing homes and challenging affordability conditions.”

MBA estimates that new single-family home sales, which have consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, were running at a seasonally adjusted annual rate of 677,000 units in July 2023.

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 July is a decrease of 1.5% from the June pace of 687,000 units. On an unadjusted basis, MBA estimates that there were 56,000 new home sales in July 2023, a decrease of 6.7% from 60,000 new home sales in June.

By product type, conventional loans composed 65.3% of loan applications, FHA loans composed 24.2%, RHS/USDA loans composed 0.3%, and VA loans composed 10.2%. The average loan size for new homes decreased from $400,281 in June to $397,148 in July.

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