MBA’s report found that new home sales increased by 3% from September
Mortgage applications for new home purchases dipped by 15.2% year-to-year in October, according to a monthly builder survey published by the Mortgage Bankers Association this week.
However, on a month-to-month basis, activity was actually 6% higher in October than in the month prior. The strong monthly gain puts MBA’s estimate of new home sales at its strongest pace since January 2021, the report said.
Joel Kan, associate vice president of economic and industry forecasting at the MBA, noted in a statement that purchase activity in October was dominated by higher mortgage loan balance transactions, pushing the average new home loan size over $412,000—a record in the survey.
In September, the average mortgage loan size of new homes clocked in at $408,522, the survey found.
“Recent U.S. Census data show an increasing share of new sales are for homes yet to be built or still under construction, and a shrinking share of completed homes,” Kan said. “Housing demand remains strong, and buyers are making quick decisions in a still very competitive market.”
Kan also noted that homebuilders continue to face delays and challenges from “supply-chain bottlenecks and rising costs.” Continued material and labor shortages have made many homebuilders delay putting newly constructed houses up for sale.
“Overall construction costs, as measured by the Producer Price Index (PPI), recorded an annual increase of 12.3% in October, which is almost five times the average annual change,” he added.
The trade group estimates that new single-family home sales were running at a seasonally adjusted annual rate of 897,000 units in Oct. 2021, up 6.4% from the September pace of 843,000 units.
Meanwhile, on an unadjusted basis the report found that new home sales increased by 3% on a month- to-month basis, growing from 66,000 new home sales in September to 68,000 new home sales in October.
Regarding product type, conventional mortgage loans reigned supreme, making up 75.7% of loan applications. FHA loans composed 13.5% of applications, while VA loans and USDA loans composed 10.3% and 0.5%, respectively.