Applications for new home purchases on the rise

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Published Date 5/17/2021

One of the big differences between buying a home with experience and a newly built house is that there are several "givens." You don't really negotiate on the price, and once you sign on the dotted line, you know the house will be yours. According to the Mortgage Bankers Association's Builder Application Survey, there was a 30.8%, year-over-year increase in new home purchase applications for April 2021 — a major increase compared to March 2021 when applications decreased by 9%.

Joel Kan, MBA's associate vice president of Economic and Industry Forecasting, says, "Purchase applications for new homes, unadjusted for typical seasonal patterns, declined in April, but the average loan size increased to its highest level in MBA's survey. The purchase market remains strong overall, but low housing inventory and accelerating home prices have started to adversely impact purchase activity." He goes on to say that homebuilders have also reported significantly higher input prices, which contributes to the ongoing rise in sales prices and average loan sizes.

The National Mortgage Professional's Navid Persaud reported that adjusting for these seasonal effects, new home sales in April rebounded from a two-month slump, increasing 8% to an annualized pace of 770,000 units. On an unadjusted basis, the MBA estimates that there were 72,000 new home sales in April 2021, unchanged from March. According to the report, conventional loans made up nearly 73% of loan applications, with the balance shared by FHA and VA loans. The average loan size of new homes increased from $374,353 in March to $377,434 in April.

Source: NMP | TBWS

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