Months of high mortgage rates and low existing inventory led to another annual increase in new home purchases in June. Mortgage applications for the purchase of new homes jumped 26.1% in June compared to the same period last year, according to Mortgage Bankers Association builder application survey. Compared to the previous month, requests fell by 5%.
MBA estimates that about 687,000 new single-family homes were sold in June at a seasonally adjusted annual rate. That’s a 9% drop from May’s pace of 755,000 units. On an unadjusted basis, MBA estimates there were 60,000 new home sales in June 2023, down 6.3% from 64,000 new home sales in May.
“New home buying activity continues to be a bright spot as new home applications and home sales have increased on a yearly basis,” said Joel Kan, MBAVice President and Deputy Chief Economist. “With existing inventory still held back by homeowners, potential buyers have turned to newly built homes instead. The rise in mortgage rates in June likely led to a pullback in purchases during the month, with the 30-year fixed rate averaging nearly 6.8%. However, new home purchase applications have now posted year-on-year increases for five consecutive months.
Mortgage purchase rates this week averaged 6.78%, the biggest weekly decline since mid-March, according to the latest Freddie Mac PMMS.
Homebuilders built an annualized rate of 1.434 million homes in June, down 8% from May and 8.1% from June 2022, according to the United States Census Bureau. Construction of single-family homes fell 7% month-over-month to 935,000 in June.
The average loan size increased from $403,581 in May to $400,281 in June. Conventional loans represented 65.5% of loan applications. Federal Housing Administration (FHA) 24.1% Compound Loans, veterans affairs (VA) loans represented 10% of total applications and Rural Housing Service (right) and united states department of agriculture (USDA) loans were 0.3%.
The survey tracks the volume of applications from mortgage affiliates of homebuilders across the country. Using this data, MBA provides an initial estimate of new home sales volumes at the national, state and metro level.