November’s mortgage applications for newly built homes remained strong year-over-year, but they declined from October’s number, according to the Mortgage Bankers Association’s latest Builder Application Survey.
Compared to November 2019, new-home mortgage applications were up 34.7%, but they were down 16% on a consecutive-month basis in the MBA’s survey, which reflects feedback from builder lending affiliates representing roughly one-third of the market.
Early estimates of new-home sales, based on that data, suggest that the seasonally adjusted annual number of units built was 827,000, down 10.5% from 927,000 in October.
On an unadjusted basis, the MBA estimates there were 59,000 new homes sold in November, representing a 15.7% decline on a consecutive-month basis from 70,000 the previous month.
From housing shortages to the pandemic’s impact on jobs, several variables have contributed to the short-term slowdown in new-home sales and loan applications, said Joel Kan, associate vice president of economic and industry forecasting at the MBA.
“We’re at a point where there are a number of factors that are running together and pulling things in different directions. The net effect is they pulled the numbers down in November,” he said.
“The fact that inventory’s still tight, that’s probably also causing a little downward pressure on these growth numbers. When you have more buyers than you have sellers, there are only so many transactions that can happen,” Kan added.
Even with the short-term lull in November and the uncertainties related to the pandemic, the MBA is forecasting growth in new-home sales going into the new year.
“I think there’s upside potential given the vaccine development,” Kan said. “We’re still hearing a lot of anecdotes from both lenders and builders that there is still a strong demand for new homes.”
At $357,554, the average loan size in November was up slightly from the multiyear high of $355,684
The breakdown of builder-app loan types in November was similar to what was seen in October.
Conventional loans dominated with a 71.8% market share, followed by Federal Housing Administration-insured loans (16.8%), mortgages guaranteed by the Department of Veterans Affairs (10.8%) and Rural Housing Service/U.S. Department of Agriculture loans (0.9%).
