New home sales surged in August to the highest level observed in the Mortgage Bankers Association’s Builder Applications Survey since it began in 2012.
The survey found that seasonally adjusted new home sales for August reached 601,000 sales, while on an unadjusted basis, applications were up following a sluggish July.
“New home purchase applications increased 5% over the month and increased more than 14% compared to August a year ago,” said Lynn Fisher, MBA’s Vice President of Research and Economics. However, this change does not include any adjustment for typical seasonal patterns.
The MBA calculates the new home sales estimate using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. MBA’s Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level.
“While our new home sales estimates have trailed the recent Census data, the increase in our series in August, which derives from a different source of data compared to the Census, provides some corroboration that single family building activity has remained strong even as the summer winds down,” explained Fisher.
“Our sense is that builders have been attempting to catch up with demand in the face of labor shortfalls and other limiting factors in various parts of the country,” she continued.
When broken up by product type, conventional loans composed 67.7% of loan applications, FHA loans composed 18.4%, RHS/USDA loans composed 0.7% and VA loans composed 13.2%.
Additionally, the average loan size of new homes decreased from $325,843 in July to $325,224 in August.
The seasonally adjusted estimate for August is an increase of 11.3% from the July pace of 540,000 units.