July/August 2022 Issue

Data: July Purchase Mortgage Apps For New Homes Decreased 16.1 Percent

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for July 2022 shows mortgage applications for new home purchases decreased 16.1 percent compared from a year ago. Due to a revision in the prior month’s submission from one of our participants, MBA is restating June results. Compared to June 2022, applications decreased by 7 percent. This change does not include any adjustment for typical seasonal patterns.

MBA’s estimate of new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 591,000 units in July 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. 

“Mortgage applications to purchase newly built homes weakened in July, as prospective homebuyers continue to delay decisions because of economic uncertainty and still-high home prices and mortgage rates. The slide in purchase applications for new homes – now down for the fourth consecutive month and 16 percent lower than a year ago – is consistent with data on declining homebuilder sentiment and slowing permitting activity for new construction,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “MBA’s estimate of new home sales, which is a reliable leading indicator, was also lower in July at a 591,000-unit sales pace, which is the slowest since April 2020.”

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

By product type, conventional loans composed 70.7 percent of loan applications, FHA loans composed 17.7 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 11.4 percent. The average loan size of new homes decreased from $423,221 in June to $416,029 in July.

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.