Applications for mortgages for new home purchases increased 17% in January compared with December and were up 18.9% compared with January 2020, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).
“New home sales activity started 2021 at a strong pace, with purchase mortgage applications for newly constructed homes jumping nearly 19 percent compared to last January,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “These results are consistent with the still-increasing pace of single-family housing starts and permitting activity reported over the last several months. The low supply of existing homes on the market, and changing household preferences toward newer, larger homes, continue to spur buyer demand.”
The MBA estimates that new home sales increased more than 3% in January to an annual rate of 905,000.
Kan says this “is the second-highest since our tracking began in 2013, and slightly below October 2020’s record pace of 927,000 units.”
On an unadjusted basis, the MBA estimates that there were 69,000 new home sales in January, an increase of 16.9% from 59,000 in December.
By product type, conventional loans composed 72.6% of applications, FHA loans composed 16.2%, RHS/USDA loans composed 0.9% and VA loans composed 10.3%.
The average loan size for a new home decreased was $363,493 in January, down from $367,502 in December.
Photo: Erik Mclean
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