New home purchases surged 24% in February, kicking off the spring buying season, the February Mortgage Bankers Association Builder Application Survey said.
MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of homebuilders across the country. This change does not include any adjustment for typical seasonal patterns.
Broken up by product type, conventional loans composed 67.7% of loan applications, FHA loans composed 18.7%, RHS/USDA loans composed 0.8% and VA loans composed 12.8%. These levels are not too different from the month prior.
The average loan size of new homes increased from $325,806 in January to $328,370 in February.
“Mortgage applications to homebuilder affiliates increased across the board in our survey for February as continued low interest rates and fairly mild weather helped to kick off the spring buying season,” said Lynn Fisher, MBA’s vice president of Research and Economics.
Looking at the most recent mortgage rate report from Freddie Mac, mortgage rates are still well below levels seen at the end of last year.
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 544,000 units in February 2016.
Fisher noted that this is nearly 12% above February a year ago.
In addition, the seasonally adjusted estimate for February is an increase of 9% from the January pace of 499,000 units.
On an unadjusted basis, the MBA estimates that there were 47,000 new home sales in February 2016, an increase of 23.7 percent from 38,000 new home sales in January.