The Mortgage Bankers Association (MBA) is predicated a 6 percent decline in new home sales in May compared to April.  The forecast is based on the association's monthly Builder Applications Survey (BAS) of mortgage subsidiaries of home builders nationwide.  The sales estimate does not include any adjustment for typical seasonal patterns.

Lynn Fisher, MBA's Vice President of Research and Economics said, "Despite applications being down in May, each month this year has seen positive year over year growth in mortgage applications for new homes, and we expect modest growth in housing starts to be reported later this week as the spring building season continues   While mortgage applications for new homes have declined almost 17 percent on an unadjusted basis from their peak in March of this year, applications in May remain eight percent above their level from the same time one year ago."

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 488,000 units in May 2016, based on data from the BAS. On a seasonally adjusted basis May sales are estimated to have decreased 3 percent from the April pace of 503,000 units to 488,000 units. On an unadjusted basis, the MBA estimates that there were 47,000 new home sales in May 2016, a decrease of 2.1 percent from 48,000 new home sales in April. The new home sales estimate is derived using mortgage application information from the BAS, 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. That report will be released on June 23.

MBA's recent projections have not held up well against official numbers.  Last month MBA forecast an 11 percent downturn in April sales (although MBA said at the time it was "possibly a technical variation) to a seasonally adjusted annual rate of 503,000.  The Census Bureau reported a surge of 16.6 percent to a seasonally adjusted 619,000 units. The March estimate was for a 17 percent increase while the Census Bureau number was down 1.5 percent.

Conventional loans received a 68.4 percent share of applications for new home purchase mortgages while the FHA share was 17.6 percent and VA loans got 13.4 percent.  The average loan size of new homes increased from $325,233 in April to $328,032 in May.