New Home Sales, Prices Faded in October

The Mortgage Bankers Association (MBA) notes
that applications for the purchase of new homes declined by 2.1 percent in
compared to the same month in 2017. 
Those applications were also 11 percent lower than in September.  The information, taken from responses to MBA’s
Builder Application Survey, does not include any adjustment for seasonal

Based on the survey results and other
assumptions including about market coverage, MBA estimates that new
single-family home sales were at a seasonally adjusted rate of 673,000 in
October, an increase of 4.7 percent from the September sales rate of 643,000
units. On an unadjusted
basis, the MBA projects 53,000 new home sales occurred during the month, up by
6 percent from 50,000 sales in September.

Conventional loan applications accounted for 70.9 percent of the
total, FHA loans comprised 17.1 percent, VA applications 11.2 percent, and RHS/USDA
made up 0.7 percent. The average loan size of new homes decreased
from $333,086 in September to $331,732 in October.

Joel Kan, MBA’s Associate Vice President of Economic and
Industry Forecasting said, “While we have seen some monthly swings in new home
sales in 2018, the year-to-date average sales pace is around seven percent
higher than the same period in 2017. Additionally, the average loan size for a
new home purchase application, at around $332,000, was at its lowest since July
2017. This is potentially a sign that there has been some additional inventory
in the new home market, and that the rapid price growth in some geographies is
starting to ease.”

MBA’s Builder Application Survey tracks application volume from
mortgage subsidiaries of home builders across the country. Official new home
sales estimates are conducted by the Census Bureau on a monthly basis. In that
data, new home sales are recorded at contract signing, which is typically
coincident with the mortgage application. 
October new home sales will be reported on Wednesday, November 28.

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