Mortgage Applications For New Home Purchases Decreased 10.6 Percent In April

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for April 2022 shows mortgage applications for new home purchases decreased 10.6 percent compared to a year ago. Compared to March 2022, applications decreased by 14 percent. This change does not include any adjustment for typical seasonal patterns.

“New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With the supply of existing homes on the market still at extremely low levels, the new home market is an important source of housing supply. However, the pace of construction has slowed in recent months. MBA’s estimate of new home sales declined for the fifth consecutive month to 701,000 units, the slowest sales pace since May 2020.”

Added Kan, “The average loan size increased to a new survey high of $436,576, and over half of applications were for loan amounts greater than $400,000. Higher rates and sales prices and larger loan sizes are eroding housing affordability and pricing some buyers out of the market.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 701,000 units in April 2022, 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 April is a decrease of 6.8 percent from the March pace of 752,000 units.  On an unadjusted basis, MBA estimates that there were 65,000 new home sales in April 2022, a decrease of 12.2 percent from 74,000 new home sales in March. 

By product type, conventional loans composed 76.7 percent of loan applications, FHA loans composed 13.1 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 10.1 percent. The average loan size of new homes increased from $436,151 in March to $436,576 in April.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.