The Mortgage
Bankers Association is projecting a sizeable decline in new home sales occurred
last month as applications for their purchase declined 3 percent
month-over-month and were 23.8 percent lower than in June 2020. The change does
not include any seasonal adjustment.

Based on the
application data, gathered from its Builder Application Survey (BAS) and other
data including an estimate of market coverage, MBA estimates that  single-family home sales were running at a
seasonally adjusted annual rate of 704,000 units in June 2021. This is a decrease
of 5 percent
from the May pace of 741,000 units.  On an unadjusted
basis, MBA estimates that there were 66,000 new home sales in June 2021, a
decrease of 2.9 percent from 68,000 sales in May. 

“Homebuilders are
encountering stronger headwinds of late, as severe price increases for key
building materials, rising regulatory costs, and labor shortages impact their
ability to raise production. This has dampened new home sales and quickened
home-price growth,” said Joel Kan, MBA’s Associate Vice President of Economic
and Industry Forecasting. “Additionally, still-low levels of for-sale
inventory are also pushing prices higher as competition for available units
remains high among prospective buyers. Applications for new home purchases fell
for the third consecutive month, while the average loan amount surged to
another record high at $392,370. In addition to price increases, we are also
seeing fewer purchase transactions in the lower price tiers as more of these
potential buyers are being priced out of the market, further exerting upward
pressure on loan balances.”

Added Kan, “Our
estimate of new home sales in June dropped to its lowest annual pace since May
2020 at 704,000 units. The average pace of sales has remained strong at around
738,000 for the past three months, but it is still around 7 percent lower than
the average for 2020. Last year was strongest year for new home sales in over a
decade.”

By product type,
conventional loans composed 74.4 percent of loan applications, FHA loans had a 14.0
percent share, VA loans accounted for 10.6 percent and RHS/USDA loans 1.0
percent. The average loan size of new homes increased from $384,323 in May to
$392,370 in June.

MBA’s Builder
Application Survey tracks application volume from mortgage subsidiaries of home
builders across the country. Utilizing this data, as well as data from
other sources, MBA provides an early estimate of new home sales volumes at the
national, state, and metro level. This data also provides information
regarding the types of loans used by new home buyers. Official new home
sales estimates are published monthly by the Census Bureau. In that data, new
home sales are recorded at contract signing, which is typically coincident with
the mortgage application. The Census Bureau will issue its June report on July
26.

By Jann Swanson , dated 2021-07-20 15:29:16

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Courtesy of Mortgage News Daily

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