New Year Brings Swell in New Home Purchase Applications
Posted By Victoria Boss Vero Beach Realtor || 19-Feb-2014
Mortgage News Daily recently reported on new home sales from the Mortgage Bankers Association. The association estimates that in January, new homes sold at a seasonally adjusted rate of 543,000 units, increasing from 402,000 units sold in December. In unadjusted terms, new home sales increased an estimated 36 percent from December to January, up from an estimated 28,000 sold to an estimated 38,000 units the next month. Mortgage Bankers Association gathers these estimates using mortgage application information from their Builder Application survey, as well as estimations in market coverage and other such dynamics. The Builders Application survey tracks the volume of applications from the mortgage subsidiaries of builders across the nation.
In unadjusted standings, the application figures for new home purchases increased by 27 percent in the time from December to January. Conventional loans represented 69.4 percent of the loan applications and FHA loans composed 15.9 percent. Additionally, Rural Housing/ U.S. Department of Agriculture loans comprised 1.3 percent of loan applications, with VA loans makings up 13.4 percent. There was a decrease in the average size of new home loans, coming down from $300,444 in December to $289,358 in January.
Mike Fratantoni, chief economist for the Mortgage Bankers Association, is not surprised by January’s increase in applications for new home purchases. Fratantoni stated that while the 35 percent increase from December “May appear to conflict with other data such as MBA’s purchase application index and NAR’s existing home sales data that point to a weak market for existing homes, our Builder Application Survey (BAS) estimate is consistent with reports of homebuilder sentiment that show strength in the market for new homes. It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December.”
The Census Bureau publishes official new home sales estimates on a monthly basis. Their estimates record new home sales at contract signing. Signing typically coincides with mortgage applications.