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July new-home purchase mortgage applications saw a year-over-year increase. According to Mortgage Bankers Association (MBA) builder application survey data for the month, mortgage applications for new homes increased 39% compared with a year ago. On a month-to-month basis, applications increased slightly by 1% from June. The change doesn’t include adjustment for typical seasonal patterns.

“New-home sales activity continued to rebound in July after a pandemic-induced low point in April 2020,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “On an unadjusted basis, new-home sales were estimated to be up 14% over the year and showed year-over-year gains for the second consecutive month in July.”

Kan added that typically new-home purchases peak in April and then decline through the remainder of the year. “With the disruption this spring, seasonal patterns are not holding, and hence the seasonal adjustment is likely overstating the increase for this month,” he said. “While this is a signal of strong demand for housing, we remain concerned about supply. Housing starts have not kept up with demand, and this could hold back the pace of sales in the coming months.”

According to MBA estimates, new single-family home sales were at a seasonally adjusted annual rate of 890,000 units in July. The new-home sales estimate is factored by using mortgage application information from the builder application survey as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for July, according to the MBA, is a 15% increase from the June pace of 774,000 units. On an unadjusted basis, there were 72,000 new-home sales in July, which is up 1.4% from 71,000 new-home sales in June.

Conventional loans composed the majority of loan applications at 67.2%, followed by Federal Housing Administration loans at 20.6%, Veterans Affairs loans at 11%, and Rural Housing Service/Department of Agriculture loans at 1.2%. The average loan size in July was $345,929, up from $338,589 the prior month.