Mortgage Applications Dip Slightly In February; Still Big Gains Year Over Year

Mortgage applications for new home purchases increased 25.9 percent in February over a year ago – though they were down 1 percent from a month earlier, according to data released Tuesday by the Mortgage Bankers Association.

“Despite a monthly decrease in February new applications and estimated new home sales, the year-over-year trends were strong, with new applications increasing 26 percent, and our estimate of new home sales increasing 8 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Looking ahead, there is significant uncertainty regarding how the coronavirus epidemic will impact the housing market, and some of January’s record-level activity could have been attributed to the warmer winter weather, lower mortgage rates, and the tight inventory of existing homes on the market – especially in lower price tiers.” 

In its monthly Builder Application Survey, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 746,000 units in February 2020 – a decrease of 13.8 percent from January.

Conventional loans composed 69.3 percent of loan applications, FHA loans composed 18.5 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 11.4 percent. The average loan size of new homes decreased from $346,140 in January to $340,169 in February.