New Home Sales Estimates Slip -MBA

New homes sales posted a loss in May, erasing the 5 percent gain made in April.  The Mortgage Bankers Association (MBA) estimated that new single-family home sales were running at a seasonally adjusted annual rate of 374,000 units in May compared to 419,000 units in April, a seasonally adjusted decline of 8 percent.   

On an unadjusted basis the annual estimate for May is a decrease of 10.7 percent from that of April.  Sales for the month were estimated at 36,000 on an unadjusted basis, a decrease of 14.3 percent from an estimate of 42,000 sales in April. 

The MBA bases its estimate of sales on applications for mortgages to purchase newly constructed homes.  Data is gathered through MBA's Builder Application Survey conducted among mortgage subsidiaries of home builders across the country.

By product type, conventional loans composed 69.3 percent of loan applications, FHA loans 15.5 percent, VA loans 13.6 percent, and Rural Housing Service/USDA loans 1.7 percent.  The average loan size of new homes decreased from $299,094 in April to $296,427 in May.

In addition to data from new home builders MBA's estimates are derived using assumptions regarding market coverage and other factors.  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.