New Home Purchase Apps Decline. Blame the School Year?

Applications for the purchase of newly constructed homes fell in May, a decline which the Mortgage Bankers Association (MBA) attributed at least in part to seasonal factors.  Data from MBA's Builder Application Survey shows a decrease of 9 percent in applications during the month when compared to April's numbers.  There is no adjustment for typical seasonal patterns.

By product type, conventional loans composed 67.4 percent of loan applications, FHA loans for 19.1 percent, VA loans 12.3 percent and RHS/USDA loans 1.2 percent. The average loan size of new homes increased from $315,670 in April to $320,744 in May.

 "Mortgage applications to homebuilders declined in May following an improved start to the year. Consistent with the intent to complete new homes in time for the school year, applications fell at a similar rate between April and May last year. That said, application volume is 15% percent ahead of the same month last year," said Lynn Fisher, MBA's Vice President of Research and Economics.

Based on application data from its survey and assumptions regarding market coverage and other factors the MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 459,000 units in May 2015.  When seasonally adjusted the May data represents a decrease of 5.7 percent from the April pace of 487,000 units. On an unadjusted basis, the MBA estimates that there were 45,000 new home sales in May 2015, a decrease of 6.3 percent from 48,000 new home sales in April.

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.