November New Home Purchase Mortgage Application Volume Is Mixed
The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for November 2020 shows mortgage applications for new home purchases increased 34.7 percent compared from a year ago. Compared to October 2020, applications decreased by 16 percent. This change does not include any adjustment for typical seasonal patterns.
“November new home sales activity, both mortgage applications and home sales, ran at a pace considerably ahead of 2019, showing the ongoing strong growth in housing demand and new residential construction,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “However, MBA estimates that after climbing to a new survey high in October, the seasonally adjusted pace of new home sales declined in November. Signs of a slowdown in the economic recovery likely contributed to the expected monthly decrease in activity.”
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 827,000 units in November 2020, 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 November is a decrease of 10.8 percent from the October pace of 927,000 units. On an unadjusted basis, MBA estimates that there were 59,000 new home sales in November 2020, a decrease of 15.7 percent from 70,000 new home sales in October.
By product type, conventional loans composed 71.8 percent of loan applications, FHA loans composed 16.8 percent, RHS/USDA loans composed 0.9 percent and VA loans composed 10.4 percent. The average loan size of new homes increased from $355,684 in October to $357,554 in November.
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.
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