Mortgage applications for new construction increased in August | ET REALITY

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Demand of newly built Housing remains high as existing inventory for sale remains historically low. Mortgage applications for the purchase of new homes increased 20.6% in August year over year.

Compared to July 2023, applications increased by 4%. This change does not include any adjustment for typical seasonal patterns.

The MBA survey tracks the volume of mortgage subsidiary applications from home builders across the country.

“Even though the 30-year fixed rate averaged more than 7% in August, loan applications for new home purchases increased during the month and from a year ago,” said Joel Kan, vice president and deputy chief economist at MBA.

The proportion of FHA applications decreased slightly in August but remained high, Kan said. This indicates that a higher proportion of first-time homebuyers are active in the new home sales market.

“Our new home sales estimate showed a 4% increase at the strongest sales pace in three months at 702,000 units,” he added.

According to MBA estimates, new single-family home sales occurred at a seasonally adjusted annual rate of 702,000 units in August 2023. That’s 3.7% higher than July’s pace of 677,000 units. Unadjusted, MBA estimates there were 59,000 new home sales in August 2023, an increase of 5.4% from 56,000 new home sales in July.

By product type, conventional loans represented 65.8% of loan applications. Meanwhile, FHA loans accounted for 23.8% of total loan applications, while VA loans accounted for 10.2%. The average loan size for new homes increased to $398,092 in August from $397,148 in July.

However, 7% mortgage rates and lower housing affordability pushed down the homebuilder confidence index, which fell to 50 in August. In July, the pace of new home sales increased 4.4% compared to June, reaching a seasonally adjusted annual rate of 714,000.

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