Lending

Applications for new home purchases jump 8% in October

Increase heavy in higher-priced homes

application

The Mortgage Bankers Association Builder Application Survey data for October 2014 shows mortgage applications for new home purchases increased by 8% relative to the previous month. 

This change does not include any adjustment for typical seasonal patterns.

By product type, conventional loans composed 68.2% of loan applications, FHA loans composed 16.2%, RHS/USDA loans composed 1.5% and VA loans composed 14.2%. The average loan size of new homes increased from $298,274 in September to $300,289 in October.

“Applications for new home purchases picked up in October, particularly for higher-priced homes,” said Mike Fratantoni, MBA’s chief economist.  “The continued improvement in the job market and still low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level.”

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 461,000 units in October 2014, based on data from the BAS. 

The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.  

The seasonally adjusted estimate for October is an increase of 8.5% from the September pace of 425,000 units. On an unadjusted basis, the MBA estimates that there were 36,000 new home sales in October 2014, an increase of 12.5% from 32,000 new home sales in September.  

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