The Mortgage Bankers Association (MBA) is expecting May to provide an uptick in new home sales.  Results of MBA's Builder Application Survey indicate that applications for new home purchase mortgages increased 4 percent from April on a non-seasonally adjusted basis, and were 15 percent higher than in May 2016. On a seasonally adjusted basis MBA anticipates the monthly increase at 8.6 percent.

"Following a decline in April, applications for new homes slightly rebounded month-over-month in May, setting up a 15 percent year over year increase relative to May of 2016," said Lynn Fisher, MBA's Vice President of Research and Economics. "While March has signaled the peak in applications for new homes for the last two years, we may see more sustained activity throughout the balance of this year as demand for new homes continues to increase and strong house price growth continues to motivate homebuilding."

New single-family home sales were estimated to be at a seasonally adjusted annual rate of 605,000 units in May, up from a rate of 557,000 in April. On an unadjusted basis, the MBA estimates that there were 57,000 new home sales during the month, an increase of 5.6 percent from the revised pace of 54,000 new home sales the prior month.

MBA's Builder Application Survey is conducted among mortgage subsidiaries of new home builders across the country. The data provides an early estimate of home sale volumes and information on the types of loans used by new home buyers.  Official new home sales estimates are conducted by the Census Bureau from homes sales recorded at contract signing, typically coincident with the mortgage application. The Census Bureau report for May will be released on Friday, June 23.

By product type, conventional loans composed 69.2 percent of loan applications. FHA loans had a 17.5 percent share and VA loans 12.2 percent. RHS/USDA loans accounted for 1.1 percent. The average loan size of new homes decreased from a revised $329,244 in April to $324,844 in May.