Mortgage applications for new-home purchases in June increased 54.1% from a year ago, according to data from the Mortgage Bankers Association (MBA) Builder Application Survey. Compared with May, applications increased 20%.
“The new-home purchase market continues to recover—applications surged 20% in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that home buying activity that was delayed by the pandemic in March and April is just being realized later in the season,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “The fact that applications are up over 50% from last June further reinforces that point.”
According to the MBA, it is estimated that new single-family home sales were pacing at a seasonally adjusted annual rate of 774,000 units in June. The new-home sales estimate is derived using mortgage application information from the Builder Application Survey as well as assumptions regarding market coverage and other factors.
The seasonally adjusted estimate for last month is a 15.2% increase from May’s pace of 672,000 units. The MBA estimates, on an unadjusted basis, 71,000 new-home sales occurred in June, a 9.2% increase from May’s 65,000 new-home sales.
“We do anticipate that the new-home construction will speed up to attempt to better meet demand,” added Kan. “However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”
The MBA broke down the loans in June by product type, with conventional loans comprising 65.1% of applications. FHA loans were at 22.6%, U.S. Department of Agriculture loans at 1%, and Veterans Affairs loans at 11.2%. The average loan size for new homes increased to $338,589 in June over May’s $332,793.