While applications for new home purchase mortgages jumped in September, the
Mortgage Bankers Association (MBA) expects only modest changes in the September
sales data. MBA’s Builder Application Survey (BAS) data shows mortgage
applications for new home purchases increased 38.2 percent in September
compared to a year earlier but were down 5 percent from August 2020. The latter
change does not include any adjustment for typical seasonal patterns.

MBA estimates new single-family homes were selling at a seasonally adjusted
annual rate of 869,000 units in September 2020. This estimate is derived using
mortgage application information from the BAS, as well as assumptions regarding
market coverage and other factors. The estimate is a decrease of 0.2
percent from the August sales rate of 871,000 units. On an unadjusted
basis, MBA estimates that there were 67,000 new home sales during the month, down
1.5 percent from 68,000 sales in August.   

“The strong year-over-year results for non-seasonally adjusted new home
sales applications – up 38 percent – and estimated home sales – up 20 percent -
are indicative of the fundamental strength seen in the housing market since the
spring,” according Joel Kan, MBA’s Associate Vice President of Economic and
Industry Forecasting. “Demand for newly built homes is strong, as many
buyers appear to seek more space for work, in-home schooling, and
leisure,” he said. “However, the moderation in the seasonally adjusted
sales pace the last two months could mean that demand has slowed recently -
likely because of tight inventory conditions and the slowing improvement in the
job market
.”  

Added Kan, “MBA estimates that September new home sales slowed slightly
from August but remained well ahead of 2019’s pace.”  

Conventional loans accounted for 71.3 percent of loan applications while
17.8 percent were for FHA loans. VA loans composed 10.1 percent and RHS/USDA
loans 0.8 percent. The average loan size of new homes increased from $348,576
in August to $354,316 in September.  

MBA’s Builder Application Survey tracks application volume from mortgage
subsidiaries of new home builders across the country. Utilizing this data,
as well as data from other sources, MBA is able to provide an early estimate of
new home sales volumes at the national, state, and metro level as well as information
on the types of loans used by new home buyers. Official new home sales
estimates are conducted by the Census Bureau and are recorded at contract
signing, which is typically coincident with the mortgage application. September
Census Bureau sales estimates will be released on Monday, October 26.

By Jann Swanson , dated 2020-10-19 13:31:15

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Courtesy of Mortgage News Daily

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