Sales to Slump as Costs Drive Builder Bottleneck


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The Mortgage Bankers Association (MBA) is projecting a
decline in new home sales in May. Its computation is based on information from
its Builder Application Survey (BAS) which collects information on mortgage
applications for new home purchases from the mortgage subsidiaries of home
builders nationwide.

Their non-seasonally adjusted BAS data indicates that
applications were down by 4.0 percent from April and by 0.5 percent compared to
the previous May.  Based on this information
and other information regarding market coverage and other factors, MBA
estimates that new homes were sold in May at a seasonally adjusted annual rate
of 626,000 units. This is down 4.6 percent from the April rate of 656,000

Joel Kan, MBA Associate Vice President of Economic
and Industry Forecasting, said, “Despite strong demand, builders have not
been able to ramp up the supply of new homes, as they face rising costs from
key inputs such as lumber and having to raise wages to fill open positions.  Additionally, our estimate of new home sales
declined in May, reaching its lowest level since December 2017.”

On an unadjusted basis, MBA estimates that there
were 60,000 new home sales in May 2018, a decrease of 4.8 percent from 63,000
new home sales in April. Still, new home sales were more than 5 percent higher
than one year ago.

Applications for conventional loans comprised 71.1
of those for new home purchases in May. FHA loans received a 15.8
percent share, RHS/USDA loans accounted for 1.0 percent and VA loans 12.1
percent. The average loan size of new homes increased from $336,870 in April to
$337,515 in May. 

MBA’s new home sales report is an early estimate
of volumes at the national, state, and metro level. The report also provides
information regarding the types of loans used by new home buyers. Official new
home sales estimates are conducted by the Census Bureau and the Department of
Housing and Urban Development from data recorded at contract signing, which is
typically coincident with the mortgage application.  That report for May will be published on June

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