New Home Purchase Mortgage Applications in U.S. Dip in May

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According to the Mortgage Bankers Association's latest Builder Application Survey for May 2016, U.S. mortgage applications for new home purchases decreased by 6 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.

"Despite applications being down in May, each month this year has seen positive year over year growth in mortgage applications for new homes, and we expect modest growth in housing starts to be reported later this week as the spring building season continues, " said Lynn Fisher, MBA's Vice President of Research and Economics. "While mortgage applications for new homes have declined almost 17 percent on an unadjusted basis from their peak in March of this year, applications in May remain eight percent above their level from the same time one year ago."

By product type, conventional loans composed 68.4 percent of loan applications, FHA loans composed 17.6 percent, RHS/USDA loans composed 0.6 percent and VA loans composed 13.4 percent. The average loan size of new homes increased from $325,233 in April to $328,032 in May.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 488,000 units in May 2016, 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 May is a decrease of 3 percent from the April pace of 503,000 units. On an unadjusted basis, the MBA estimates that there were 47,000 new home sales in May 2016, a decrease of 2.1 percent from 48,000 new home sales in April.

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.