The Mortgage Bankers Association (MBA) is predicting another strong month
for new home sales. The association says its Builder Application Survey (BAS)
data for July 2020 shows mortgage applications for new home purchases increased
39 percent compared to a year ago and is up 1 percent compared to June. This
would be the second consecutive month of annual increases. This change does not
include any adjustment for typical seasonal patterns.
Based on these results, as well as assumptions regarding market coverage and
other factors, MBA estimates new single-family home sales were running at a
seasonally adjusted annual rate of 890,000 units in July. This is 15 percent
higher than their June pace of 774,000. On an unadjusted basis, MBA estimates
that there were 72,000 new home sales in July 2020, an increase of 1.4 percent
from 71,000 new home sales in June.
“New home sales activity continued to rebound in July after a pandemic
induced low point in April 2020,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “Typically, new home
purchases peak in April and then decline through the remainder of the year.
With the disruption this spring, seasonal patterns are not holding, and hence
the seasonal adjustment is likely overstating the increase for this month.
While this is a signal of still strong demand for housing, we remain concerned
about supply. Housing starts have not kept up with demand and this could hold
back the pace of sales in the coming months.”
By product type, conventional loans accounted for 67.2 percent of loan
applications and FHA loans for 20.6 percent. Eleven percent of applications
were for VA backed loans and RHS/USDA loans composed 1.2 percent of the total. The
average loan size of new homes increased from $338,589 in June to $345,929 in
MBA’s Builder Application Survey tracks application volume from mortgage
subsidiaries of home builders across the country. Official new home sales
estimates are conducted by the Census Bureau on a monthly basis. In that data,
new home sales are recorded at contract signing, which is typically coincident
with the mortgage application. The Census Bureau will release data on July
sales on August 25.