Applications for new home purchases dropped in December, falling 6.8 percent behind those a year earlier. The deficit from November was even larger, a decline of 13 percent. The Mortgage Bankers Association (MBA) estimates that those numbers, which do not include any adjustment for seasonal patterns, translates into new home sales during the month at an annual rate of 552,000 units, a 12 percent decrease from the estimated November pace of 627,000 units. On an unadjusted basis, MBA says there were 37,000 new homes sold during the month, down 17.8 percent from the 45,000 new home sales in November.
"New home sales declined for the second straight month in December, from 627,000 units to 552,000 units, as factors such as a volatile stock market and economic uncertainty, both here and abroad, likely kept some prospective buyers away," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "This pullback in activity was in spite of falling mortgage rates and a robust job market. Looking ahead, if mortgage rates remain low, housing inventory rises, and home-price growth continues to steady, we expect to see a rebound in purchase activity this spring."
MBA derives its new home sales estimates from its Builder Application Survey (BAS) which it conducts monthly among mortgage subsidiaries of new home builders. It combines the BAS data with assumptions regarding market coverage and other factors.
Conventional loans accounted for 69.5 percent of home purchase loan applications in December, and FHA loans had a 17.3 percent share. VA loan applications made up 12.5 percent and those to RHS/USDA composed 0.7 percent. The average loan size for new home purchase increased from $326,037 in November to $334,944 in December.
Official new home sales estimates are conducted by the Census Bureau and the Department of Housing and Urban Development on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application. The New Home Sales report for November from the two government agencies has been delayed by the partial government shutdown. At present the December report release is schedule for Friday, January 25.