The Mortgage Bankers Association (MBA) released its regular monthly estimates for new home sales on Thursday and also announced a new initiative to promote affordable housing.  The initiative, to be headed by Steven O'Connor, MBA's Senior Vice President for Public Policy and Industry Relations, is intended "to help develop stronger and more effective affordable housing partnerships in both the policy and business arenas."  The partnership in turn will hopefully "promote more sustainable, affordable homes for purchase and rental for underserved people and communities, especially minorities and low-to-moderate-income Americans."  

"Housing affordability is an issue facing millions of Americans, both those who rent and those who want to buy a home," said O'Connor. "There is no easy solution. The only way we are going to solve this is by getting lenders together with policymakers, consumer advocates, community leaders, and other stakeholders, and using our collective knowledge and experience to find the answers."

Based on responses to its Builder Application Survey (BAS), MBA expects new home sales to increase in May.  Applications for new home purchase financing grew by 0.1 percent from April but jumped 20.1 percent on an annual basis.  Those figures are not adjusted to reflect seasonal patterns.

Based on those applications and other data, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 727,000 units in May.  This is an increase of 0.7 percent from April's pace of 722,000 annualized units.  On an unadjusted basis, MBA estimates that there were 69,000 new home sales, unchanged from April.

Conventional loans accounted for 69.4 percent of loan applications and FHA loans for 17.9 percent, Twelve percent of the total were VA applications and RHS/USDA loans had a 0.7 percent share. The average loan size of new homes decreased from $338,745 in April to $330,311 in May.

Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting commented, "Purchase activity strengthened in May, with new home mortgage applications and our estimate of new home sales both showing increases compared to a year ago, at 20 percent and 15 percent, respectively.  The average loan size for new home applications decreased almost 3 percent, signaling the ongoing moderation in home prices and a shift to building lower-priced homes. Declining mortgage rates and more new entry-level supply are good news for the housing market this summer."

MBA's Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. 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 Census Bureau report for May will be released on June 25.