Mortgage applications for new-home purchases increased 54.1% in June compared to the same month last year, according to the latest Builder Application Survey from the Mortgage Bankers Association (MBA).
Applications were also up monthly, rising 20% from May on a non-seasonally adjusted basis. The average loan sizes for new homes was up 1.7%, from $332,793 in May to $338,589 in June.
“The new home purchase market continues to recover — applications surged 20 percent in June, and although this is not adjusted for seasonal impacts, it is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season,” said Joel Kan, associate vice president of economic and industry forecasting for the MBA. “The fact that applications are up over 50 percent from last June further reinforces that point.”
The MBA estimates that new-home sales in June ran at a seasonally adjusted annual rate of 774,000 units, up 15.2% from May’s 672,000-unit pace. That’s the strongest level of activity since January, Kan noted.
On an unadjusted basis, the MBA estimates 71,000 June new-home sales, up 9.2% from May.
While the surge in new-home applications could portend big things, Kan added that the market’s potential remains closely tied to the persistently short supply of homes available to buy.
“We do anticipate that new home construction will speed up to attempt to better meet demand,” he said. “However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”