New Home Mortgage Applications Increase in U.S.

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According to the Mortgage Bankers Association's Builder Application Survey for September 2016, U.S. mortgage applications for new home purchases increased 3 percent relative to September 2015. Compared to August 2016, applications decreased by 7 percent. This change does not include any adjustment for typical seasonal patterns.

"After a strong start in 2016 and despite evidence of increasing costs, mortgage applications for new homes have maintained a pace modestly above 2015 rates," said Lynn Fisher, MBA's Vice President of Research and Economics. "The monthly decline in mortgage applications in September is largely attributable to typical declines in building activity this time of year. That said, builders are facing headwinds from rising labor costs.  Looking forward, year over year growth in applications is likely to remain muted for the balance of 2016." 

By product type, conventional loans composed 68.8 percent of loan applications, FHA loans composed 17.5 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 12.7 percent. The average loan size of new homes increased from $325,224 in August to $326,998 in September.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 593,000 units in September 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 September is a decrease of 1.3 percent from the August pace of 601,000 units. On an unadjusted basis, the MBA estimates that there were 44,000 new home sales in September 2016, a decrease of 8.3 percent from 48,000 new home sales in August.

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.