The Mortgage Bankers Association (MBA) is anticipating an increase in new home sales in August. The organization's Builder Application Survey found the volume of applications to finance the purchase of newly construction homes was 33 percent higher than in August 2018 although there was a downtick of 0.2 percent month-over-month. The numbers do not include any adjustment for typical seasonal patterns.
Based on the survey and other assumptions such as market coverage, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 785,000 units last month. The seasonally adjusted estimate for August is an increase of 4.1 percent from the July pace of 754,000 units. On an unadjusted basis, MBA estimates that August sales totaled 61,000 units, a decrease of 3.2 percent from 63,000 new home sales in July.
New home purchase activity was robust in August, as both mortgage applications and estimated home sales increased from a year ago," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Recent increases in new residential housing permits and housing starts, lower mortgage rates, and a still-strong job market all bode well for the new home sales outlook."
Applications for conventional mortgage loans made up 69.3 percent of the total. The FHA loan share was 18.1 percent, the VA share was 11.8 percent, and 0.8 percent of applications were for RHS/USDA loans. The average loan size of new homes increased from $325,457 in July to $332,497 in August.
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 July estimated sales at a rate of 635,000 units, a 12.8 percent decline from the prior month. The August Census Bureau estimate of new home sales will be published on September 25.