Mortgage applications for new home purchases surged in January according to data from the Mortgage Bankers Association's (MBA's) Builder Application Survey (BAS).  The survey of mortgage subsidiaries of home builders is used by MBA to project new home sales for the month.

January applications were up 22 percent compared to December, MBA said, and were 9.2 percent higher than in January 2016.  The month-over-month change does not include any adjustment for typical seasonal patterns.

Based on BAS data and assumptions regarding market coverage and other factors, MBA estimates that new single-family home sales were at a seasonally adjusted annual rate of 562,000 in January.  This is an increase of 17.6 percent from the December pace of 478,000 units.  On an unadjusted basis, there were an estimated 44,000 new homes sold during the month compared to 35,000 in December, more than a 25 percent gain.

"As house prices continue to rise and inventories of homes available for sale remain low, it is not surprising that mortgage applications for new homes in January came in higher than a year ago," said Lynn Fisher, MBA's Vice President of Research and Economics. "Alongside relatively low supply, rising household incomes and favorable demographics should continue to bolster demand for new homes, despite rising interest rates, leading to modest growth in new home sales this year."

Applications for conventional loans composed 67.2 percent of the total with FHA loan applications getting an 18.6 percent share, VA loans 13 percent and USDA loans 1.1 percent.  The average loan size of new homes decreased from $331,354 in December to $329,806 in January.

Official new home sales estimates are conducted by the Census Bureau and the Department of Housing and Urban Development on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.  The official report for December will be published on Friday, February 24.