Applications for mortgages to purchase newly construction homes increased by 29 percent in January.  The Mortgage Bankers Association (MBA) said that based on this volume, which is not seasonally adjusted, it estimates that new home sales were running at a seasonally adjusted annual rate of 530,000 units.

The unofficial estimate of home sales is generated by MBA from the application data it receives from a survey of the mortgage subsidiaries of home builders throughout the country as well as assumptions regarding market coverage and other factors.  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.

The annual pace new home sales in January is 29.6 percent higher than that in December, an estimated 409,000 units.  On an unadjusted basis MBA estimates that 39,000 new homes sold in January, up 39.3 percent from 28,000 new homes sales in December. 

 "On the strength of an improving labor market and low interest rates, January new home sales were up nearly 30 percent from December, " said Lynn Fisher, MBA's Vice President of Research and Economics. "Relative to a year ago, new home sales were up 2.6 percent on an unadjusted basis."

By product type, conventional loans composed 67.2 percent of loan applications, FHA loans composed 18.2 percent, VA loans 13.4 percent and RHS/USDA loans 1.1 percent.  The average loan size of new homes decreased from $311,398 in December to $304,364 in January.