Mortgage Applications for New Home Purchases Dip in December

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According to the Mortgage Bankers Association's Builder Application Survey for December 2015, U.S. mortgage applications for new home purchases decreased by 5 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.

"The BAS showed mixed-results last month with some lenders seeing steady or slightly increasing application levels while others saw declines.  On net, we estimate that new single-family home sales were down by about 8 percent in December on a seasonally adjusted basis relative to November, but remain 17 percent above a year ago," said Lynn Fisher, MBA's Vice President of Research and Economics.

By product type, conventional loans composed 68.0 percent of loan applications, FHA loans composed 18.5 percent, RHS/USDA loans composed 1.0 percent and VA loans composed 12.6 percent. The average loan size of new homes increased from $320,854 in November to $333,182 in December.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 480,000 units in December 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 December is a decrease of 8.4 percent from the November pace of 524,000 units.  On an unadjusted basis, the MBA estimates that there were 34,000 new home sales in December 2015, a decrease of 8.1 percent from 37,000 new home sales in November.

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.