New Home Financing Applications Continue Strong

It’s all relative.  The MortgagernBankers Association (MBA) said that applications for the purchase of newlyrnconstructed homes rose a scant 0.3 percent in April, on its face sort of arndisappointing number for the heart of the “spring market.”  However, that increase was on top of a 17rnpercent surge in March, indicating that the new home sales continue to bernstrong.   </p

MBA’s new home numbers are based on mortgagernapplication data gathered through its Builder Application Survey (BAS) of mortgagernsubsidiaries of new home builders.  It isrnnot adjusted for typical seasonal patterns. </p

Based on data from the BAS the MBA estimates newrnsingle-family home sales were running at a seasonally adjusted annual rate ofrn487,000 units in April compared to a seasonally adjusted rate of 510,000 unitsrnin March, a decrease of 4.5 percent.  Onrnan unadjusted basis, the estimate for new home sales in April was 48,000 units,rndown 2 percent from 49,000 units in March. rnThese estimates are derived from survey information as well asrnassumptions regarding market coverage and other factors.</p

Mike Fratantoni, MBA’s Chief Economist said, “Applicationsrnwere essentially flat in April, but March and April builder applications werernat their highest levels since we began tracking them in August 2012. On a yearrnover year basis, applications to builders for new home mortgages were up 16rnpercent.  Although our survey indicatesrnthere was likely a slight decrease in new homes sales in April, we had seenrnincreased activity earlier in the year, so borrowers who were able to enter thernmarket got a head start on the traditional spring buying season.”</p

Sixty-seven percent of applications were forrnconventional loans and 18.8 percent for loans backed by FHA.  VA loans comprised 12.8 percent of the totalrnand RHS/USDA loans 1.4 percent.  Thernaverage loan size of new homes increased from $314,394 in March to $315,670 inrnApril, its highest level in the history of the survey.</p

Official new home sales estimates are provided byrnthe Census Bureau on a monthly basis.  Inrnthat data, new home sales are recorded at contract signing, which is typicallyrncoincident with the mortgage application. April Census data will be released onrnMay 26.

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