New home mortgage volume drops to 13-month low in June

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Buying a new house the volume of applications has dropped every month in the second quarter, as construction costs and low inventories took loan amounts to an all-time high.

June applications fell 3% from May and 23.8% year-over-year, according to the Mortgage Bankers Association’s Homebuilder Apps Survey.

The seasonally adjusted annual estimate of 704,000 June sales was down 5% from 741,000 units in May. It was the lowest amount since May 2020. The annual sales rate over the past three months is about 7% lower than the 2020 average, according to Joel Kan, associate vice president of economic and industrial forecasting at MBA. .

“Homebuilders have been facing stronger headwinds lately, as the prices of key building materials, rising regulatory costs and labor shortages are impacting their ability to increase production, ”Kan said in the report. “In addition, the still low levels of inventory for sale are also pushing up prices, as competition for available units remains high among potential buyers.”

Unadjusted estimates showed that 66,000 new homes were sold in June, up from 68,000 in May and 71,000 a year ago. Although activity has slowed, the average amount of new home mortgages increased for the fifth consecutive month and hit a new high of $ 392,370, from $ 384,323 in May and $ 338,589 the year before.

“In addition to the price increases, we are also seeing less purchase transactions in the lower price points, as more of these potential buyers are excluded from the market, putting upward pressure on loan balances.” Kan said.

Conventional loans represented 74.4% of new home loan applications, against 73.9% in May and 65.1% in June 2020. Loans insured by the Federal Housing Administration followed with a share of 14%, in monthly decrease of 14.8% and annual decrease of 22.6%. Mortgage loans guaranteed by the Department of Veterans Affairs increased from 10.4% and 11.2% to 10.6%, while loans from the Rural Housing Service and the United States Department of Agriculture took the remaining 1% , going from 0.9% and 1% respectively.


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