New Home Applications Up From December

Mortgage applications for new home purchases fell 12.5% year-over-year in January 2022, according to the Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS).

However, applications rose by 10% from December 2021, as MBA estimates 66,000 new homes were sold in January compared to December’s 60,000.

MBA estimated that new single-family sales were running at a rate of 821,000 units, down 7.4% from December’s 887,000 unit pace.

“Purchase applications for new homes fell on an annual basis in January, but the 10% monthly gain is a positive sign to start the year. While homebuyer demand remains strong, purchase activity is being constrained by higher prices and building delays due to supply-chain pressures and building materials shortages,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

“The market needs more housing, but chronic production bottlenecks, including ongoing price increases for lumber and OSB, continue to raise housing costs and harm housing affordability,” Jerry Konter, chairman of the National Association of Home Builders, said of the current state of homebuilding.

“In fact, the number of single-family homes under construction continues to rise as construction cycle times increase due to delivery delays with building materials.”

Lumber prices spiked again to an eight-month high of $1,271 per thousand board feet, leading to concern that the lumber bubble has returned.

“MBA’s estimate of new home sales fell in January to its slowest annual pace since July 2021,” Kan continuted.

“Purchase activity for new homes continues to be concentrated in the higher end of the market and overall sales prices continue to increase, as evidenced by another record-setting month for the average loan size at $427,000.”  

Conventional loans accounted for 77% of applications, followed by FHA (13%), VA loans (9.5%), and RHS/USDA loans (0.5%).