Mortgage applications for new home purchases during March were up by 26% from the prior month and up 11% year-over-year, according to data from the Mortgage Bankers Association’s (MBA) Builder Application Survey.
“Applications for the purchase of newly built homes increased in March, posting monthly and annual gains, and reaching the highest index level since the survey’s inception in 2012,” said Joel Kan, MBA’s vice president and deputy chief economist. “While the index is not adjusted for seasonality, March kicks off the start of spring homebuying season and does typically see an increase in purchase activity. Last month, mortgage rates rose and economic uncertainty increased, and our estimate of new home sales reached its highest level in four months. This growth was supported by higher levels of unsold inventory in many markets across the country, some of which were move-in ready and were relatively more appealing to homebuyers who were eager to purchase a home.”
The MBA estimated new single-family home sales were running at a seasonally adjusted annual rate of 717,000 units in March, an 11.9% rise from the February pace of 641,000 units. On an unadjusted basis, the MBA estimated there were 69,000 new home sales in March, a 21.1% increase from 57,000 new home sales in February.
The average loan size for new homes decreased from $383,570 in February to $381,938 in March. By product type, conventional loans composed 49.1% of loan applications, FHA loans accounted for 36.3%, VA loans encompassed 13.4%, and RHS/USDA loans took up a 1.2% share.
“Government applications, which include FHA, VA, and USDA/RHS loans, accounted for more than half of applications received,” Kan observed. This was the third consecutive month that the government share of applications was more than 50%. While mortgage rates overall increased in March, rates on FHA mortgages did not increase as quickly as for conforming loans, which supported some of the shift to government loans, as affordability remains a focus for many homebuyers.”
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