New-home apps jump in March as housing market revs up

New-home purchase application volume jumped in March, as buyers continue to fight tooth and nail for the scant inventory on the market.

Those applications jumped 12% from February and 7% year-over-year, according to the Mortgage Bankers Association’s Builder Application Survey. However, the estimate of new-home sales fell 4.5% month-over-month.

March’s seasonally adjusted estimate of 714,000 sales was down from 748,000 in February and the lowest monthly total since May 2020. Unadjusted estimates showed 72,000 new-home sales took place in March, up from 65,000 in February.

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While construction is on the rise compared to the last few years, homebuilders face a number of obstacles that potentially defer the influx of new inventory and keep home prices high.

“Supply chain delays have led to more expensive building materials and delayed deliveries, and these have made it more difficult for builders to keep up with the strong demand for buying a home seen in most of the country this spring,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press release.

With demand far outweighing supply, the average new-home purchase loan ascended to another record high of $374,000 in March from $370,679 in February.

Conventional loans dropped to 70.9% of loan applications, falling from a record-high share of 74% in February. Loans insured by the Federal Housing Administration followed but fell to a 14.8% share from 15.4%, mortgages guaranteed by the Department of Veterans Affairs rose to 9.9% from 9%, and Rural Housing Service and U.S. Department of Agriculture loans composed the remaining 4.4%, climbing from 1.5%.

The Builder Application Survey market index reached a five-month high of 274.54, up from February’s 245.72 and March 2020’s 256.64.

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