MBA reports new-home sales kept climbing in June

Trade group's early estimate did not agree with census data in May

Sales of new single-family homes climbed slightly from May to June as the spring buying season came to a close, but were still below last year’s level, according to an estimate by the Mortgage Bankers Association based on purchase mortgage applications.

Results of the latest MBA Builder Application Survey suggest that sales of new, single-family homes climbed 3.2 percent from May to June, to a seasonally adjusted annual rate of 386,000, the MBA said. That would represent a 6.5 percent decline from a year ago.

New-home construction image via Shutterstock.
New-home construction image via Shutterstock.

The survey is aimed at providing an early estimate of new-home sales volumes at the national, state and metro level by tracking application volume from homebuilders’ mortgage subsidiaries. But the MBA’s estimate for new-home sales in May, released on June 13, did not agree with numbers released 11 days later by the Census Bureau.

The Census Bureau, which has been tracking new-home sales since 1963, reported that new-home sales jumped 18.6 percent from April to May, to a seasonally adjusted annual rate of 504,000, a 16.9 percent annual increase.

The MBA, which began estimating new-home sales a year ago, estimated that sales of new single-family homes fell 10.7 percent from April to May, to a seasonally adjusted annual rate of 374,000 units.

The MBA bases its new-home sales estimate on mortgage information obtained through surveys of homebuilders, along with assumptions about market coverage and other factors.

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Joel Kan, the MBA’s director of economic forecasting, said the trade group uses a different sample than the Census Bureau, but captures a larger sample — about 30 percent of sales.

“The MBA data has tracked closely with Census’ data for most of the survey’s history, but due to these sample differences there may be months where the data points are different,” Kan said. “The long-term trends, however, are still similar.”

MBA_v_CensusBureau
Source: Mortgage Bankers Association

“Clearly there was a divergence in the May data. We saw a similar divergence for two months last summer,” Kan said. “Other than that, the series have tracked quite closely.”

The MBA survey of homebuilders’ mortgage subsidiaries showed conventional loans accounted for the lion’s share of new-home-purchase mortgage applications in June (67.2 percent), followed by loans backed by the Federal Housing Administration (17 percent), U.S. Department of Veterans Affairs (14.6 percent) and Rural Housing Service/U.S. Department of Agriculture(1.2 percent), according to the MBA. 

The average loan size of new homes dropped from $296,427 in May to $296,078 in June, the MBA said.

mortgage rates

A separate survey released today by Freddie Mac showed mortgage rates hardly budged this week.

Rates on 30-year fixed-rate mortgages averaged 4.15 percent with an average point of 0.7 for the week ending July 10, up from 4.12 percent last week but down from 4.51 percent a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.

Rates on 15-year fixed-rate mortgages, five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans and rates on one-year Treasury-indexed ARMs also all crept up.

Editor’s note: This story has been updated with comments from Joel Kan, director of economic forecasting for the Mortgage Bankers Association, and a chart comparing the MBA’s estimates of new-home sales with the Census Bureau’s.


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