Mortgage applications for new residential homes rose on an annual basis last month
Loan applications for new single-family constructions in April increased 4.1% on a year-over-year basis, according to the MBA's Builder Application Survey. When compared with the prior month, however, volumes declined by a nonseasonally adjusted 11%.
"This was the third straight month of year-over-year growth in applications, which signals improving housing demand for newly built homes at a time when the broader housing market is leaning more on new construction to boost for-sale inventory levels," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
Although application volumes have slowed since earlier in 2022, recent government data is providing some glimmers of an upcoming reversal.
"We expect that to translate to growth in new-home sales activity in the second half of the year," Kan said, adding that the current higher mortgage rates are also playing a role in recent market shifts.
With many homeowners hesitant to sell and give up their current low interest rates, some aspiring buyers stymied by the lack of supply, along with limited affordability on what is for sale among existing homes, are now considering new constructions.
After what was a highly depressed business environment for home construction in 2022 characterized by
Based on its April data, the MBA estimates the volume of new homes sold in April fell to 58,000 compared to 65,000 a month earlier. New-home sales are expected to come in at an annual seasonally adjusted rate of 649,000 units, representing a 2.6% decline from March's 666,000 figure. The MBA's monthly survey measures activity as reported by lending subsidiaries of homebuilders nationwide, combining its findings with analysis of data from other sources to provide estimates of new-home sales volumes.
Conventional mortgages accounted for two-thirds, or 66.2% of new-home loan applications last month. Among government-guaranteed volume, 23.4% consisted of
The average purchase size of new-home mortgage originations edged down monthly by 1.3% to $401,756 in April from $407,015, heading in the opposite direction from loans for existing properties.