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After two strong months, applications to purchase newly constructed homes retrenched a bit as broader policy issues weighed on consumers, according to the Mortgage Bankers Association.
“Ongoing concerns about economic growth and trade policy likely kept some potential buyers out of the market despite lower mortgage rates,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
“Our seasonally adjusted estimate of new-home sales was down in June after two of the strongest months in the survey’s history dating back to 2013, but remained higher than a year ago.”
There was a decline of 14% in the number of new-home purchase loan applications submitted compared with May, according to the MBA’s Builder Application Survey.
But when compared with June 2018, activity was up 17.9%, in part due to improved affordability trends.
“The average loan amount for new-home purchase applications fell slightly to its lowest level since November 2018, as home price growth continued to slow in many markets and purchase transactions have shifted away from the higher end of the price spectrum,” Kan said.
A lower average loan size indicates that new homes more affordable to first-time buyers and other purchasers at the lower end of the spectrum are likely being sold.
June’s average loan size was $329,593, compared with $330,311 in May and $333,033 in June 2018.
During June, new single-family home sales were estimated to be running at a seasonally adjusted annual rate of 646,000, based on data from the BAS, assumptions regarding market coverage and other factors.
Sales estimates were down 11.1% from May’s annual sales pace of 727,000 units. For June 2018, new-home sales were at a seasonally adjusted run rate of 626,000 units.
On an unadjusted basis, there were 58,000 new-home sales in June. That represents a decrease of 15.9% from 69,000 new-home sales in May, but a more than 9% increase from 53,000 units during the same month a year ago.
By product type, conventional loans comprised 68.7% of applications, Federal Housing Administration-insured loans represented 18%, Department of Veterans Affairs-guaranteed mortgages were sought by 12.7% of new-home buyers and Rural Housing Service/U.S. Department of Agriculture loans made up 0.6% of applications.
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