Key facts
- New home purchase mortgage applications decreased 3% month-over-month in May.
- Year-over-year, new home purchase mortgage applications increased 3.8% in May.
- New home sales were estimated at 642,000 units on a seasonally adjusted annual rate in May.
- The average loan size for new home purchases was $372,825 in May, the lowest in 10 months.
- Mortgage rates averaged over 6.5% in May.
New home purchase mortgage applications saw a 3% decrease in May compared to the previous month, according to the Mortgage Bankers Association's (MBA) Builder Application Survey. Despite this monthly dip, applications were up 3.8% year-over-year. The MBA estimates new home sales at a seasonally adjusted annual rate of 642,000 units for May, a slight decline from April's 655,000 units. This slowdown occurred even as builders continued to offer incentives, with homebuyers reportedly hesitant due to elevated prices, economic uncertainty, and average mortgage rates exceeding 6.5% during May.
The average loan size for new home purchases fell to $372,825 in May, the lowest level in 10 months. This trend is consistent with government-backed loans, such as FHA and VA loans, comprising over half of all applications for five consecutive months. Conventional loans represented 49.6% of applications, FHA loans 35.6%, VA loans 13.7%, and USDA loans 1.1%. The survey utilizes mortgage application data from homebuilder subsidiaries and market assumptions to provide early estimates of new home sales prior to the U.S. Census Bureau's official report.