MBA Forecasts Dip in October New Home Sales

The Mortgage Bankers Association (MBA) is estimating that the pace of new home sales slowed slightly in October compared to the previous month.  Its Builder Application Survey (BAS) which is conducted among mortgage subsidiaries of new home builders nationwide, showed a 2 percent decrease in purchase applications in October, a number that is not seasonally adjusted. The BAS however, show applications were 8 percent higher than in October 2015.

MBA estimates that sales during the month totaled 44,000 on an unadjusted basis, unchanged from September. On a seasonally adjusted basis MBA estimates that new home sales were running at an annual rate of 547,000 units, a 7.8 percent decline from September's rate of 593,000.

MBA utilizes data on new home purchase applications from the BAS along with data from other sources to provide an early estimate of new home sales.  Official new home figures come from the Census Bureau and the Department of Housing and Urban Development based on home purchase contract signings, an event that is typical coincident with the mortgage application.  The official report on new home sales in October will be issued on November 23.

MBA's forecasts have been considerably off the mark for some months, but they nailed it in September.  Based on BAS data they projected sales at an annual rate of 593,000, identical to the Census/HUD estimate.  Their projection for sales on an unadjusted basis was 46,000 units, 2,000 higher than the official number.

Applications for conventional loans comprised 67.7 percent of new home loan applications, and 18.4 percent were for FHA loans.  VA loans had a 12.9 percent share and RHS/USDA loans 1.0 percent.  The average loan size of new homes increased from $326,998 in September to $329,634 in October.