June Purchase Mortgage Applications For New Homes Decreased 12 Percent

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2022 shows mortgage applications for new home purchases decreased 12 percent compared from a year ago. Compared to May 2022, applications decreased by 10 percent. This change does not include any adjustment for typical seasonal patterns.

MBA’s monthly 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 620,000 units in June 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. 

“Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Additionally, new residential construction and permitting activity weakened from March through May, reducing the number of homes available for home buyers. MBA’s estimate of new home sales for June fell to a pace of 620,000 homes, a 15 percent drop of over 100,000 units compared to May.”

The seasonally adjusted estimate for June is a decrease of 14.7 percent from the May pace of 727,000 units. On an unadjusted basis, MBA estimates that there were 57,000 new home sales in June 2022, a decrease of 6.6 percent from 61,000 new home sales in May. 

By product type, conventional loans composed 73.7 percent of loan applications, FHA loans composed 15.0 percent, RHS/USDA loans composed 0.5 percent and VA loans composed 10.7 percent. The average loan size of new homes decreased from $430,855 in May to $426,966 in June.

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.