Increased sales of lower-priced newly built homes was not enough to counter a decline in mortgage application volume for the segment in August, according to the Mortgage Bankers Association.
Its Builder Application Survey found that applications for recently constructed homes fell by 2% compared with July and 4.6% when compared with August 2017.
However, because of the activity in the lower end of the market, the seasonally adjusted annual rate of new home sales was increased by 5% to 669,000 units in August from 637,000 units in July. This is the second month in a row the estimate increased, Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
Unadjusted home sales during the month was unchanged from July, at 53,000 units.
“Low inventory of homes for sale has been an issue this year, and newly constructed units have been one way to ease the shortage,” Kan said. “Growth in August was focused in the lower-price tiers. In fact, for the first time in four months, monthly growth was driven by the lower half of the market, based on application size.”
The average dollar amount applied for decreased to $332,801 — the lowest in over a year — from $337,775 in July.
By product type, conventional loans composed 71.4% of August’s loan applications, while Federal Housing Administration-insured loans composed 15.6% (up from 15.3% in July). Veterans Affairs-guaranteed loans made up 11.8% of applications (up from 11.4% over the previous month), while Rural Housing Service/U.S. Department of Agriculture loans were sought by 1.2% of borrowers (up from 1.1%).