May New Home Purchase Mortgage Applications Decreased 5.9 Percent

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for May 2021 shows mortgage applications for new home purchases decreased 5.9 percent compared from a year ago. Compared to April 2021, applications decreased by 9 percent. This change does not include any adjustment for typical seasonal patterns.

“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”  

Add Kan, “MBA’s estimate of new home sales showed that the seasonally adjusted annualized pace of sales dropped 4 percent drop in May. Since reaching a survey-high 927,000 units in October 2020, the annual pace of has now fallen around 20 percent, weighed down by low housing inventory and rising prices.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 741,000 units in May 2021, 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 May is a decrease of 3.8 percent from the April pace of 770,000 units.  On an unadjusted basis, MBA estimates that there were 68,000 new home sales in May 2021, a decrease of 5.6 percent from 72,000 new home sales in April. 

By product type, conventional loans composed 73.9 percent of loan applications, FHA loans composed 14.8 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 10.4 percent. The average loan size of new homes increased from $377,434 in April to $384,323 in May.

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.