Rising rates continue to slow would-be buyers, as evident by new numbers out from the Mortgage Bankers Association.
The MBA is reporting that mortgage applications for new home purchases were down 5 percent in May, year-over-year. Apps were also down 4 percent compared to April 2022.
“Applications to purchase new homes in May fell by 4 percent from April, as mortgage rates hit 5.5 percent and further dampened demand. Activity was already constrained due to tight for-sale inventory, high sales prices, and extended building completion timelines,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “After increasing for 15 consecutive months, the average loan size fell slightly from April’s survey high to $430,855, which is a potential indication that cooling demand may be starting to moderate price growth.
“MBA’s estimate of new home sales increased for the first time in five months,” Kan added, “showing a 4 percent gain to a 727,000-unit sales pace.”
Conventional loans composed 75.8 percent of loan applications, FHA loans composed 13.6 percent, RHS/USDA loans composed 0.2 percent and VA loans composed 10.4 percent. The average loan size of new homes decreased from $436,576 in April to $430,855 in May.