Mortgage Applications for New Homes Decrease 16.1% YOY in July

Mortgage applications for new-home purchases decreased 16.1% in July on a year-over-year basis, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS). The MBA also restated its June results, reporting applications decreased by 7% in June 2022 compared with June 2021.

Conventional loans composed 70.7% of loan applications, FHA loans composed 17.7%, RHS/USDA loans composed 0.2%, and VA loans composed 11.4% in July, according to the MBA. The average loan size of new homes decreased from $423,221 in June to $416,029 in July.

“Mortgage applications to purchase newly built homes weakened in July, as prospective home buyers continue to delay decisions because of economic uncertainty and still-high home prices and mortgage rates,” MBA associate vice president of economic and industry forecasting Joel Kan says. “The slide in purchase applications for new homes—now down for the fourth consecutive month and 16% lower than a year ago—is consistent with data on declining home builder sentiment and slowing permitting activity for new construction.”

The MBA estimated that new single-family home sales were running at a seasonally adjusted annual rate of 591,000 units in July, according to BAS data. The new-home sales estimate is derived using mortgage application information from the BAS as well as assumptions regarding market coverage and other factors, according to the MBA. According to Kan, the estimate of new-home sales is the slowest pace since April 2020.

The estimate for July is a 2.6% month-over-month decrease from the revised June pace of 607,000 units. On an unadjusted basis, the MBA estimates there were 50,000 new-home sales in July 2022, a decrease of 10.7% from the revised 56,000 new-home sales in June.

The BAS tracks application volume from mortgage subsidiaries of home builders across the country. From this data, as well as data from other sources, the MBA provides an early estimate of new-home sales volumes at the national, state, and metro levels.