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New Home Purchase Applications Surged in New Year

by devteam February 13th, 2014 | Share

The January spurt in applications forrnnew home purchases does not surprise Mike Fratantoni, chief economists for thernMortgage Bankers Association.  Fratantonirnsaid that, while the 35 percent increase from December “May appear to conflictrnwith other data such as MBA’s purchase applicationrnindex and NAR’s existing home sales data that point to a weak market forrnexisting homes, our Builder Application Survey (BAS) estimate is consistentrnwith reports of homebuilder sentiment that show strength in the market for newrnhomes.  It is also worth noting that thernsignificant January increase also followed a particularly slow pace of sales inrnNovember and December.”<br /<br /MBA estimates that new homes sold at a seasonally adjusted annual rate of 543,000rnunits in January compared to 402,000 units in December.  On an unadjusted basis, there were anrnestimated 38,000 new homes sold during the month, up 36 percent from anrnestimate of 28,000 units in December 2013.  MBA derives its figures usingrnmortgage application information from the BAS, as well as assumptions regardingrnmarket coverage and other factors.<br /<br /On an unadjusted basis MBA says that mortgage applications for new homernpurchases increased by 27 percent relative to the previous month.  Byrnproduct type, conventional loans composed 69.4 percent of loan applications andrnFHA loans 15.9 percent.  Rural HousingrnService/U.S. Department of Agriculture (RHS/USDA) loans made up 1.3 percent ofrnthe total and VA loans 13.4 percent.  The average size of new home loans decreasedrnfrom $300,444 in December to $289,358 in January.<br /<br /MBA's Builder Application Survey tracks application volume from mortgagernsubsidiaries of home builders across the country.  Official new home salesrnestimates are published by the Census Bureau on a monthly basis.  In thatrndata, new home sales are recorded at contract signing, which is typicallyrncoincident with the mortgage application.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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