June Home Purchase Apps Down 12% YOY
New home purchase applications fell 12% YOY in June, and were down 10% from May, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey.
New single-family home sales ran at a seasonally-adjusted annual rate of 620,000 units in June, down 14.7% from May’s pace of 727,000 units.
The unadjusted rate was estimated to be 57,000 home sales, down 6.6% from 61,000 in May.
New home sales are estimated using mortgage application information and assumptions regarding market coverage and other factors.
“Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Additionally, new residential construction and permitting activity weakened from March through May, reducing the number of homes available for home buyers. MBA’s estimate of new home sales for June fell to a pace of 620,000 homes, a 15% drop of over 100,000 units compared to May.”
Conventional loans accounted for 73.7% of loan applications, followed by FHA loans (15%), VA loans (10.7%), and RHS/USDA loans (0.5%). The average loan size fell to $426,966 from $430,855 the month prior.
Rising mortgage rates, home price appreciation, and a looming recession have pushed some potential homebuyers to the sidelines. Home sales were down almost 16% YOY in June, the largest drop since May 2020.
“The country’s economic woes have already cooled the housing market, and they’re likely to continue dampening demand,” said Redfin Chief Economist Daryl Fairweather.
“The Fed has signaled it may increase interest rates further to combat stubbornly high inflation, which could harm consumer confidence, and lower stock prices mean fewer prospective homebuyers can afford a down payment.”
Housing affordability is at its lowest point since 2006. This is particularly damaging for first-time homebuyers, who have less capital than older buyers and no equity to give them a boost.