Mortgage applications for new home purchases continue to slow while loan sizes remain on the upswing, according to new data from the Mortgage Bankers Association (MBA).
The organization’s May 2021 Builder Application Survey (BAS) revealed that loan applications for new homes decreased 9% month over month and 5.9% year over year.
“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month [from $377,434 in April] and reached a new survey high,” said Joel Kan, the MBA’s associate vice President of Economic and Industry Forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”
The MBA estimated that new single-family home sales ran at a seasonally adjusted pace of 741,000 units in May, based on BAS data. That’s a drop of 3.8% from April’s rate of 770,000. On an unadjusted basis, MBA estimated 68,000 new home sales in May 2021, a decrease of 5.6% from 72,000 new home sales in April.
Since reaching a survey-high 927,000 units in October 2020, the annual pace of has now fallen around 20 percent, “weighed down by low housing inventory and rising prices,” Kan said.