The Mortgage Bankers Association (MBA) is projecting a decline in new home sales in May. Its computation is based on information from its Builder Application Survey (BAS) which collects information on mortgage applications for new home purchases from the mortgage subsidiaries of home builders nationwide.
Their non-seasonally adjusted BAS data indicates that applications were down by 4.0 percent from April and by 0.5 percent compared to the previous May. Based on this information and other information regarding market coverage and other factors, MBA estimates that new homes were sold in May at a seasonally adjusted annual rate of 626,000 units. This is down 4.6 percent from the April rate of 656,000 units.
Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting, said, "Despite strong demand, builders have not been able to ramp up the supply of new homes, as they face rising costs from key inputs such as lumber and having to raise wages to fill open positions. Additionally, our estimate of new home sales declined in May, reaching its lowest level since December 2017."
On an unadjusted basis, MBA estimates that there were 60,000 new home sales in May 2018, a decrease of 4.8 percent from 63,000 new home sales in April. Still, new home sales were more than 5 percent higher than one year ago.
Applications for conventional loans comprised 71.1 percent of those for new home purchases in May. FHA loans received a 15.8 percent share, RHS/USDA loans accounted for 1.0 percent and VA loans 12.1 percent. The average loan size of new homes increased from $336,870 in April to $337,515 in May.
MBA's new home sales report is an early estimate of volumes at the national, state, and metro level. The report also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau and the Department of Housing and Urban Development from data recorded at contract signing, which is typically coincident with the mortgage application. That report for May will be published on June 25.