New home purchases increased 6.8 percent compared to August 2016. Compared to July 2017, applications increased by 7 percent relative to the previous month, according to a report released yesterday by the Mortgage Bankers Association (MBA). This change does not include any adjustment for typical seasonal patterns.
“Mortgage applications for new homes rebounded a bit in August, as lower than expected interest rates and growth in existing home prices continue to fuel demand, sustaining year-to-date growth in applications of more than 7 percent compared to 2016,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “Average loan size for new homes increased in August to $334,940, the highest level since the series began. More than one-third of applications for new homes in our August survey came from Florida and Texas. It is unclear what impact hurricanes Harvey and Irma will have on housing starts in the region in coming months, but it is likely that recent new home sales will be delayed in breaking ground.”
By product type, conventional loans composed 71.9 percent of loan applications, FHA loans composed 14.4 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 12.7 percent. The average loan size of new homes increased from $329,483 in July to $334,940 in August.
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 655,000 units in August 2017, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
The seasonally adjusted estimate for August is an increase of 16.5 percent from the July pace of 562,000 units. On an unadjusted basis, the MBA estimates that there were 52,000 new home sales in August 2017, an increase of 6.1 percent from 49,000 new home sales in July.