Significant Increase in October New Home Sales

The Mortgage Bankers Association (MBA) noted a significantrnincrease in new home sales in October. rnMBA’s estimate is based on responses to its Builder Application Surveyrnconducted among mortgage subsidiaries of home builders across the country.  Sales increased by 8.5 percent from thernSeptember seasonally adjusted annual rate of 425,000 units to 461,000 units. </p

On an unadjusted basis MBA estimates that therernwere 36,000 new home sales in October, a 12.5 percent increase from Septemberrnsales of 32,000 unit.  MBA bases itsrnestimate on mortgage applications for new home purchases as well as assumptionsrnregarding market coverage.</p

 “Applicationsrnfor new home purchases picked up in October, particularly for higher pricedrnhomes,” said Mike Fratantoni, MBA’s Chief Economist.  “The continuedrnimprovement in the job market and still low mortgage rates are supporting thernupper levels of the purchase market, while the tight credit environment continuesrnto constrain sales at the entry level.”</p

MBA said that 68.2 percent of the applications forrnnew home purchase were for conventional mortgage loans.  FHA loans comprised 16.2 percent, VA loansrn14.2 percent and Rural Housing Service (USDA) loans 1.5 percent.  The average size of a loan for a new homernincreased to $300,289 from $298,274 in September.</p

MBA provides its survey data as an early estimate ofrnnew home sales volumes at the national, state, and metro level.  Officialrnnew home sales estimates are conducted by the Census Bureau on a monthlyrnbasis.  In that data, new home sales are recorded at contract signing,rnwhich is typically coincident with the mortgage application.  

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