The Mortgage Bankers Association (MBA) is expecting new
home sales to spike
again in June, based on results of its Builder Application
Survey (BAS). That survey shows that mortgage applications for new home
purchases were up 20 percent from May and 54.1 percent compared to a year ago.
The data does not include any adjustment for typical seasonal patterns.

Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting said, “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.

Based on the BAS finding, 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. The seasonally
adjusted estimate for June is an increase of 15.2 percent from the May pace of
672,000 units. On an unadjusted basis, MBA estimates that there were 71,000 new
home sales in June 2020, an increase of 9.2 percent from 65,000 sales in May. The
estimates are derived using mortgage application information from the BAS, as
well as assumptions regarding market coverage and other factors.

Added Kan, “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.”

Applications for conventional loans accounted for 65.1 percent of the new
home purchase total and applications for FHA loans made up 22.6 percent,
RHS/USDA loans comprised 1.0 percent and VA loans 11.2 percent. The average
loan size of new homes increased from $332,793 in May to $338,589 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 can provide an early estimate of new home sales
volumes at the national, state, and metro level and information regarding the
types of loans used by new home buyers. 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. June new home sales data will be published on July
24.

By Jann Swanson , dated 2020-07-15 13:02:57

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Courtesy of Mortgage News Daily

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