Mortgage applications for new home purchases fell 5.7% in July from a year earlier and declined 1% from June, according to the Mortgage Bankers Association (MBA)’s Builder Application Survey. The figures, released Thursday, are not seasonally adjusted.
“Purchase activity for newly built homes slowed in July, with both applications to purchase and the estimated number of new home sales falling behind last year’s pace,” Joel Kan, MBA vice president and deputy chief economist, said in a statement.
Kan said elevated new home inventory and higher mortgage rates likely contributed to weaker demand as buyers became more rate-sensitive.
MBA estimated that new single-family home sales ran at a seasonally adjusted annual rate of 647,000 units in July, down 3% from 667,000 in June. The July pace also fell below the 664,000-unit average recorded during the first six months of the year, marking the third decline in the annualized sales pace in four months.
On an unadjusted basis, MBA estimated 54,000 new home sales in July, down 3.6% from 56,000 in June.
The Builder Application Survey tracks mortgage application volume from homebuilder-affiliated mortgage companies nationwide. MBA uses the data, along with other sources and assumptions about market coverage, to provide an early estimate of new home sales.
Conventional loans accounted for 50% of applications in July, while Federal Housing Administration(FHA) loans made up 34.6%. U.S. Department of Veterans Affairs(VA) loans represented 13.6% of applications, and U.S. Department of Agriculture(USDA) loans accounted for 1.8%.
The average loan size for a new home fell to $374,438 in July, down from $375,218 in June.
MBA’s new home sales estimate is considered a leading indicator of the U.S. Census Bureau’s monthly New Residential Sales report because new home sales in the government data are recorded when a sales contract is signed, which typically coincides with the mortgage application.
This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.