Mortgage applications for new home purchases during October were down by 2.6% from one year earlier and were down by 1% from one month earlier, according to data from the Mortgage Bankers Association (MBA).
The MBA estimated new single-family home sales were running at a seasonally adjusted annual rate of 771,000 units in October, up by 13.4% from the September pace of 680,000 units. On an unadjusted basis, MBA estimates that there were 55,000 new home sales in October, an increase of 1.9% from 54,000 new home sales in September.
The average loan size for new homes increased from $379,107 in September to $381,404 in October. By product type, conventional loans composed 51.9% of loan applications, FHA loans had a 35.1% share, VA loans accounted for 12.3%, and RHS/USDA loans took up 0.7% of the market.
Joel Kan, MBA’s vice president and deputy chief economist, stated, “The increased use of ARM loans, for which rates were averaging almost 80 basis points lower than fixed-rate loans, also contributed to the jump in sales and a slightly higher average loan size, the third monthly increase. In October, our data showed that ARM loans accounted for 25% of applications, up from 16% a year ago.”
Kan added, “The MBA’s new home sales estimate is a useful leading indicator of the Census new home sales number, which has not been published since the August data release. Unadjusted mortgage applications counts declined slightly over the month but remained at a healthy pace relative to the past three years.”
