Mortgage applications for the purchase of new homes climbed in October, pointing to a likely pickup in sales, according to a report from the Mortgage Bankers Association (MBA).
MBA released on Thursday its Builder Applications Survey for October, revealing an 8 percent monthly pickup in new home purchase applications after a flat September. The increase doesn't factor in seasonal adjustments.
Mike Fratantoni, chief economist for the group, noted that the biggest increase came in applications for higher-priced homes.
"The continued improvement in the job market and still low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level," Fratantoni said.
Based on October's application data, MBA estimates new single-family home sales for the month ran at a seasonally adjusted annual rate of 461,000 units, reflecting a month-over-month increase of 8.5 percent. Unadjusted, the group estimates there were 36,000 new homes sold last month, up 12.5 percent.
For September, MBA estimated new homes sold at a pace of 425,000 units compared to the Census Bureau's estimate of 467,000 units. The government's first look at October sales—and revised estimate of September's sales rate—is due to come out November 26.
By product type, MBA reported conventional loans made up 68.2 percent of total loan applications for new homes. Applications for mortgages backed by the Federal Housing Agency (FHA) composed 16.2 percent, followed by applications for loans insured by the Department of Veterans Affairs at 14.2 percent.
The average loan size for new homes last month was $300,289, MBA reported, up from $298,274 in September.