The Mortgage Bankers Association (MBA) is projecting a decline in new home sales for June, putting them significantly behind those in June 2017. MBA's Builder Applications Survey (BAS) shows mortgage applications for the purchase of newly constructed homes were down 12 percent from May and 8.8 percent year-over-year. The survey's results are not adjusted to reflect seasonal patterns.
"Applications for new home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5 percent relative to the first 6 months of 2017. Our sense is that builders remain constrained by the tight job market for construction labor and rising input costs, particularly lumber costs," said Mike Fratantoni, MBA Chief Economist and Senior Vice President of Research and Industry Technology.
Based on the BAS which MBA conducts each month to gather mortgage application information from mortgage subsidiaries of new home builders and on other market data, the company estimates new single-family home sales were running at a seasonally-adjusted annual rate of 587,000 units in June. This represents a 6.2 percent decline from the annual pace of 626,000 units in May. On an unadjusted basis the projection is for sales of 53,000 new homes, down 11.7 percent from the 60,000 unit estimate for May.
By product type, conventional loans composed 71.3 percent of loan applications and FHA loans had a 15.9 percent share. VA applications accounted for another 11.6 percent, and RHS/USDA loans 1.1 percent. The average loan size of new homes decreased from $337,515 in May to $333,033 in June.
MBA's new home sales information is an early estimate. 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, issued jointly with the Department of Housing and Urban Development, will be published July 25.