New Home Sales Pull Back Amid Global Uncertainty

News

Applications for new home
purchases dropped in December, falling 6.8 percent behind those a year earlier.
The deficit from November was even larger, a decline of 13 percent.  The Mortgage Bankers Association (MBA) estimates
that those numbers, which do not include any adjustment for seasonal patterns,
translates into new home sales during the month at an annual rate of 552,000
units, a 12 percent decrease from the estimated November pace of 627,000 units.
On an unadjusted basis, MBA says there were 37,000 new homes sold during the
month, down 17.8 percent from the 45,000 new home sales in November.

“New home sales declined for the second
straight month in December, from 627,000 units to 552,000 units, as factors
such as a volatile stock market and economic uncertainty, both here and abroad,
likely kept some prospective buyers away,” said Joel Kan, MBA’s Associate Vice
President of Economic and Industry Forecasting. “This pullback in activity was
in spite of falling mortgage rates and a robust job market. Looking ahead, if
mortgage rates remain low, housing inventory rises, and home-price growth
continues to steady, we expect to see a rebound in purchase activity this
spring.”

MBA derives its new home sales estimates from its
Builder Application Survey (BAS) which it conducts monthly among mortgage
subsidiaries of new home builders. It combines the BAS data with assumptions
regarding market coverage and other factors.

Conventional loans accounted for 69.5 percent
of home purchase loan applications in December
, and FHA loans had a 17.3 percent
share.  VA loan applications made up 12.5
percent and those to RHS/USDA composed 0.7 percent.  The average loan size for new home purchase
increased from $326,037 in November to $334,944 in December.

Official new home sales estimates are
conducted by the Census Bureau and the Department of Housing and Urban
Development on a monthly basis. In that data, new home sales are recorded at
contract signing, which is typically coincident with the mortgage application.
The New Home Sales report for November from the two government agencies has
been delayed by the partial government shutdown.  At present the December report release is
schedule for Friday, January 25.

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