Applications to purchase new homes experienced a sharp drop in April, falling 11 percent from March. But the Mortgage Bankers Association (MBA), which gathers the data, said it was probably a technical variation. On a non-seasonally adjusted basis, sales were estimated at 48,000, down from 54,000 new homes sold in March.
"The index decline in April is more than likely a result of both February and March seeing a strong surge in applications for new homes and the index not being seasonally adjusted," said Lynn Fisher, MBA's Vice President of Research and Economics. "In fact, last year peak applications occurred in March."
MBA's Builder Application Survey (BAS) gathers new home application data from mortgage subsidiaries of home builders nationally. The Association uses it to provide an early estimate of new home sales volumes at the national and metro level and to track the types of loans chosen by home buyers. 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. April Census data will be released on May 24.
By product type, conventional loans composed 67.8 percent of loan applications while 18.3 percent were for FHA, 13.3 percent for VA, and 0.6 percent for RHS/USDA loans. The average loan size for new home purchases decreased from $328,898 in March to $325,233 in April.
MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 503,000 units in April 2016, based on data from the BAS as well as assumptions regarding market coverage and other factors. This is a decrease of 12.4 percent from the March pace of 574,000 units.