New homes remain in demand as mortgage applications rise in May
New-home
purchase
mortgage
applications
rose
1%
month
over
month
and
13.8%
year
over
year
in
May,
according
to
data
released
Thursday
by
the
Mortgage
Bankers
Association
(MBA).
The
data
is
derived
from
the
trade
group’s
survey
of
homebuilders.
The
MBA
also
estimated
that
sales
of
new
single-family
homes
reached
a
seasonally
adjusted
annual
rate
of
702,000
in
May,
up
from
699,000
in
April
for
the
strongest
pace
since
October
2023.
“There
continues
to
be
strength
in
the
new
home
purchase
market,
as
purchase
applications
increased
in
May
compared
to
both
the
prior
month
and
from
a
year
ago,”
Joel
Kan,
MBA’s
vice
president
and
deputy
chief
economist,
said
in
a
statement. “With
existing-home
inventory
still
lagging
in
many
markets,
many
homebuyers
have
turned
their
interest
toward
newly
built
homes.“
This
was
especially
true
for
the
Federal
Housing
Administration
(FHA)
lending
segment.
The
FHA
share
of
new-home
mortgage
applications
in
May
was
26.5%,
the
highest
share
since
November
2023
(27.1%).
Conventional
loans
comprised
63.4%
of
all
applications,
with
U.S.
Department
of
Veterans
Affairs
(VA)
loans
accounting
for
9.8%
and
U.S.
Department
of
Agriculture
(USDA)
loans
at
0.3%.
The
average
loan
size
last
month
across
all
types
of
new-home
applications
was
$400,150,
down
from
$405,000
in
April.
The
surge
in
demand
for
new
homes
is
accompanied
by
sagging
demand
for
existing
homes.
The
MBA
reported
Wednesday
that
purchase
applications
for
existing
homes
were
down
12%
year
over
year
during
the
week
ending
June
7.
Small
but
steady
declines
in
mortgage
rates
have
created
more
demand
for
refinances,
as
the
MBA’s
refinance
index
rose
28%
year
over
year
for
the
week
ending
June
7.
At
HousingWire’s
Mortgage
Rates
Center
on
Thursday,
the
30-year
average
rate
for
conforming
loans
stood
at
7.15%.
That
was
down
6
basis
points
from
the
same
time
last
week
and
43
basis
points
below
this
year’s
peak
rate
of
7.58%
recorded
on
May
2.
Closed
sales
of
new
homes
missed
estimates
in
April,
with
the
seasonally
adjusted
annual
rate
dropping
7.7%
year
over
year,
federal
data
shows.
HousingWire
Lead
Analyst
Logan
Mohtashami
wrote
last
month
that
new-home
sales
are
“in
a
slow
grind“
after
bottoming
out
in
2022.
Builders
continue
to
offer
rate
buydowns
to
attract
buyers,
but
these
aren’t
a
universal
incentive.
“The
smaller
builders
don’t
have
this
buy
down
advantage,
and
thus,
we
have
seen
a
decline
in
homebuilder
confidence
data,“
Mohtashami
wrote.
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