Mortgage

Builder apps have a banner yr in November regardless of the decline

New home mortgage applications in November remained strong year over year, but declined from October according to the Mortgage Bankers Association's latest Builder Application Survey.

Compared to November 2019, new home mortgage applications increased 34.7%, while in the MBA survey they decreased 16% compared to the previous month. This reflects the feedback from construction companies, which make up around a third of the market.

Early estimates of new home sales based on this data suggest the seasonally adjusted annual number of units built was 827,000, a 10.5% decrease from 927,000 in October.

Unadjusted, the MBA estimates that 59,000 new homes were sold in November, a decrease of 15.7% from the previous month compared to 70,000 in the previous month.

From the housing shortage to the impact of the pandemic on jobs, various variables have contributed to the short-term slowdown in new home sales and loan applications, said Joel Kan, vice president of economic and industrial forecasting for the MBA.

"We have got to a point where a number of factors come together and pull things in different directions. The net effect is that they cut the numbers in November," he said.

"The fact that inventory is still tight is also likely to put some downward pressure on those growth numbers. When you have more buyers than sellers, that's how many transactions can happen," Kan added.

Despite the short-term lull in November and the uncertainties associated with the pandemic, the MBA is forecasting growth in new home sales for the new year.

"I think with vaccine development there is upside," Kan said. "We still hear a lot of anecdotes from lenders and builders that there is still strong demand for new homes."

The average loan size in November was $ 357,554, slightly above the multi-year high of $ 355,684 in October.

The breakdown of Builder app loan types in November was similar to October.

Conventional loans dominated with a market share of 71.8%, followed by loans insured by the Federal Housing Administration (16.8%), mortgages guaranteed by the Department of Veterans Affairs (10.8%) and Rural Housing Service / USA . Loan from the Ministry of Agriculture (0.9%).

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