Mortgage Applications See Big Increase In June

New home mortgage applications jumped 54.1 percent in June over a year ago, according to a report released Tuesday by the Mortgage Bankers Association.

The MBA’s Builder Application Survey found that applications for new home purchases also increased 20 percent over May as the housing market moved forward from the absolute lows of the coronavirus pandemic.

“The new home purchase market continues to recover … (and is) another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 774,000 units in June 2020.

“We do anticipate that new home construction will speed up to attempt to better meet demand,” Kan said. “However, with the low level of homes for sale on the market, the sustainability of the upward trend in home purchase activity will hinge on supply ramping up more rapidly.”

Conventional loans composed 65.1 percent of loan applications, FHA loans composed 22.6 percent, RHS/USDA loans composed 1 percent and VA loans composed 11.2 percent. The average loan size of new homes increased from $332,793 in May to $338,589 in June.