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Mortgage applications for new-home purchases are on the rise, and their loan amounts are also getting larger, according to the Mortgage Bankers Association.
New-home purchase applications grew 3% in February from a year ago and jumped 6% from the previous month. The average loan size for these new construction homes increased to $340,692 in February from $334,532 in January.
Consumer interest in new housing helps motivate builders to continue constructing homes, which will generate additional inventory in a market drained of supply. This supports homebuyer affordability and broadens the scope of consumers interested in buying a house.
Growth in wages atop slowing home price appreciation and declining mortgage rates is also improving affordability for house shoppers.
“The housing market remains poised for a strong spring, with last month’s increase in builder applications likely leading to a healthy 7% year-over-year rise in new-home sales,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
“We are starting to see signs of more new residential construction and inventory, which increases buying opportunities for the many home shoppers who have been hampered by the ongoing lack of supply,” he continued.
By product type, conventional loans accounted for nearly 70% of mortgage applications for a new home in February, according to the MBA. Federal Housing Administration loans made up almost 18% and Veterans Affairs loans represented a 21.5% share of mortgage applications for a new house. Rural Housing Service and U.S. Department of Agriculture loans composed 0.6% of applications.