Mortgage Applications in U.S. for New Home Purchases Dip in October

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According to the Mortgage Bankers Association's Builder Application Survey Data for October 2015, mortgage applications for new home purchases decreased by 8 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.

"On top of normal seasonal slowdown, the October decline in mortgage applications to builder affiliates was likely amplified by some applications being pulled forward into September ahead of the implementation of the Know Before You Owe Rule on October 3," said Lynn Fisher, MBA's Vice President of Research and Economics. "Despite the decrease, our estimate of new single-family housing sales for October was up more than 7 percent from a year ago."

By product type, conventional loans composed 67.2 percent of loan applications, FHA loans composed 19.2 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 12.7 percent. The average loan size of new homes decreased from $324,884 in September to $320,881 in October.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 495,000 units in October 2015, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for October is a decrease of 9.7 percent from the September pace of 548,000 units.  On an unadjusted basis, the MBA estimates that there were 39,000 new home sales in October 2015, a decrease of 7.1 percent from 42,000 new home sales in September.

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 is able to provide an early estimate of new home sales volumes at the national, state, and metro level.  This data also provides 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.