The Builder Application Survey (BAS) sponsored by the Mortgage Bankers Association (MBA) indicates an increase of 54.1 percent in mortgage applications for new home purchases in June 2020, compared to June 2019. The BAS also indicates a 20 percent increase in regards to May 2020. The registered variation does not take into account any adjustment for typical seasonal patterns.
The BAS provides an early estimate of new home sales volumes based on the application volume from mortgage subsidiaries of home builders across the country; as well as data from other sources. The new home sales volumes estimate can be provided at the national, state, and metro levels.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, recently stated: “The new home purchase market continues to recover – applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season. The fact that applications are up over 50 percent from last June further reinforces that point.”
Kan also mentioned that the “MBA estimates that new home sales in June increased 15 percent to a seasonally adjusted pace of 774,000 units – which would be the strongest level of activity since January 2020.”
Although the increase in new home mortgage applications and new home sales is a good indicator of a restabilizing market, the tight supply and availability of houses come into question.
In regards to this, Kan added, “We do anticipate that new home construction will speed up to attempt to better meet demand. However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”
Lawrence Yun, the chief economist for the National Association of Realtors, addressing this topic stated “new home construction needs to robustly ramp up in order to meet rising housing demand.”
According to the MBA’s recent Builder Application Survey, new single-family home sales had an estimated seasonally adjusted annual rate (SAAR) of 774,000 units in June 2020. This represents a 15.2 percent increase compared to May’s SAAR of 672,000 units.
Analyzing from an unadjusted basis, there were 71,000 estimated new home sales in June 2020, constituting a 9.2 percent increase from 65,000 estimated new home sales in May.
The breakdown of the new home mortgage loans is as follows: 65.1 percent in conventional loans, 22.5 percent in FHA loans, 1.0 percent in RHS/USDA loans, and 11.2 percent in VA loans.
The average loan size of new homes also recorded an increase of over $4,500, growing from $332,702 in May to $338,589 in June.
Homebuying activity is seeing steady growth, as May’s BAS report also indicated a spike in new home mortgage applications in regards to May 2019, and the report from June has solidified this fact.
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