True to tradition, new home sales appear to have moved
higher in March as the calendar closed in on the start of the spring market. The Mortgage Bankers
Association (MBA) estimates sales of newly constructed homes increased by 7
percent compared to February and are 12 percent higher than a year earlier. This
change does not include any adjustment for typical seasonal patterns.
Based on the application data, MBA forecasts
that home sales were at a seasonally adjusted annual rate of 714,000 units in
March. This is a decline of 4.5 percent from the February rate of 748,000
units. On an unadjusted basis, the forecast is for 72,000 new home sales in during
the month, an increase of 10.8 percent from 65,000 sales in February.
“New home purchase application activity is
typically strong in March, and this year did not disappoint. Applications
strongly increased on a monthly and annual basis,” said Joel Kan, MBA’s
Associate Vice President of Economic and Industry Forecasting. “However, MBA’s
estimate of new home sales declined by more than 4 percent last month, as we
continue to see increasing home prices and a low number of homes on the market,
caused in part by increased challenges facing homebuilders. Supply chain delays
have led to more expensive building materials and delayed deliveries, and these
have made it more difficult for builders to keep up with the strong demand for
buying a home seen in most of the country this spring.”
Added Kan, “With home-price appreciation
remaining elevated in many markets, the average loan size for a new home
purchase reached $374,000 in March, the highest in our survey.”
By product type, conventional loans composed
70.9 percent of loan applications, FHA loans accounted for 14.8 percent, VA
loans 9.9 percent, and RHS/USDA loans 4.4 percent. The average loan size for
purchase of new homes increased from $370,679 in February to $374,353 in March.
MBA’s Builder Application Survey tracks
application volume from mortgage subsidiaries of new home builders across the
country. Coupled with assumptions regarding market coverage and other factors, the
data enables MBA to provide an early estimate of new home sales volumes at the
national, state, and metro level and the types of loans used to buy them.
Official new home sales estimates are conducted monthly by the Census Bureau at
contract signing, which is typically coincident with the mortgage
application. The next Census Bureau report will be issued on April 23.