New Home Mortgage Applications Softened in August

The Mortgage Bankers Association's (MBA's) measure of new home sales reflected a significant drop in the volume of applications for mortgages to purchase those homes in August.  Data gathered through MBA's Builder Applications Survey (BAS) indicates that the number of applications decreased by 9 percent relative to the volume in July.  The measure is not adjusted to account for typical seasonal patterns.

Based on the BAS and assumptions regarding market coverage and other factors MBA estimates that new single-family home sales in August were at a seasonally adjusted annual rate of 424,000 units.  This is a change of -2.1 percent from the estimate for July of 433,000 units.  On a non-adjusted basis sales in August were estimated to be approximately 34,000, down from 37,000 units the previous month, a decrease of 8.1 percent.  Estimated August sales were 2.9 percent below sales in August 2013 of 35,000 units.

MBA's monthly report breaks down new home purchase applications by product type.  Conventional loans made up 68.9 percent of loan applications and FHA loans 15.7 percent.  VA loans were the third largest source at 14.3 percent and 1.0 percent were RHS/USDA loans.  The average loan size to purchase new homes increased from $297,253 in July to $300,443 in August.

MBA's Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country.  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.