New Home Sales Defy Holiday Lull, Rising in December

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Despite the usual holiday lull in overall mortgage
applications, the demand for newly constructed homes increased in December.  The Mortgage Bankers Association (MBA) said
its Builder Applications Survey (BAS) found those applications were up 18
percent from November.  The change does
not include any adjustment for typical seasonal patterns.  The applications were 7.8 percent higher than
in December 2016.

Based on data from the BAS, conducted among mortgage
subsidiaries of new home builders, augmented by assumptions about market
coverage and other factors, MBA estimates new single-family home sales were
running at a seasonally adjusted annual rate of 554,000 units in December. This
is a decline of 16.4 percent from the November pace of 663,000 units. On an
unadjusted basis, there were an estimated 40,000 units sold, down 14.9 percent
from 47,000 new home sales in November.

“After playing
catch-up for 2 months following the slowdown caused by hurricanes Harvey, Irma
and Maria
, mortgage applications for new homes declined in December to a more
normal growth rate
of 7.8% on a year over year basis,” said Lynn Fisher, MBA
Vice President of Research and Economics. “Looking at all of 2017, applications
increased by 7.1 percent compared to 2016. Based on December applications, we
forecast that new home sales fell in December but remained nearly 16 percent
higher than a year ago, and we are anticipating only modest year over year
growth for new home sales in 2018. Despite robust demand, a lack of labor and
land will continue to constrain homebuilders.”

Of the applications
submitted in December, 72.5 percent were for conventional loans. FHA loans had
a 15.1 percent
share, VA loans 10.1 percent, and RHS/USDA accounted for 2.3
percent
of the total. The average size of new home purchase loans increased
from $337,427 in November to $339,203.

MBA uses its survey as well as other data to provide an early
estimate of new home sales volumes at the national, state, and metro level as
well as information regarding the types of loans used by new home buyers.
Official new home sales estimates are provided monthly by the Census Bureau.  In that data, new home sales are recorded at
contract signing, which is typically coincident with the mortgage application.  The Census Bureau will release December statistics
on January 25.



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