An early look at mortgage application activity suggests new home sales plunged in November as first-time homebuyers struggled to get a foot into the market.
The Mortgage Bankers Association (MBA) monthly survey of loan application volumes at home builders shows new home purchase activity was down 22 percent month-over-month in November, the group said Thursday. Looking at all indicators, MBA estimates new single-family home sales ran at a seasonally adjusted annual rate of 401,000 units last month, a 13 percent drop from the association's October estimate.
"Following strong new home sales in October, our data shows November sales volume dropped significantly," said Mike Frantantoni, MBA's chief economist, in a statement.
The average loan size for new home applications increased to nearly 307,000 from $300,000 in October, "indicating that builders are having greater success with higher priced homes and difficulty at the entry level, as first-time buyers continued to face tight credit conditions," Fratantoni added.
Home sales in October were at a seasonally adjusted yearly rate of 458,000, according to an estimate from the Commerce Department, up slightly from a revised September sales rate of 455,000. That estimate, which is subject to change in future reports, was more or less in line with MBA's prediction of 461,000.
The government's new home sales estimate for November is due December 23.
By product type, MBA reports that conventional loans composed 69.3 percent of total new home purchase applications. Mortgages guaranteed by the Federal Housing Administration and the Department of Veterans Affairs accounted for 15.8 percent and 14 percent of applications, respectively.