Mortgage applications for new home purchases plummets in April

Mortgage applications for new home purchases decreased 20 percent in April from the previous month and 4.3 percent in year-over-year reports, according to the Mortgage Bankers Association (MBA) Builder Applications Survey (BAS).

April was the first time this year that mortgage applications for new homes experienced a monthly decline.

“A relatively strong March may have pulled forward some applications from April, exacerbating the normal seasonal fall-off,” Lynn Fisher, MBA’s vice president of research and economics said. β€œOn net, year to date applications for new homes are running about 3 percent above the same period from 2016. Despite steady demand for housing, homebuilders continue to face rising costs for labor and materials which will continue to moderate the pace of building.”

Conventional loans composed 68.5 percent of loan applications, while Federal Housing Administration loans composed 17.7 percent, Veterans Affairs loans made up 12.4 percent, and Rural Housing Service loans accounted for 1.4 percent.

The average loan size of new homes decreased from $328,192 in March to $326,284 in April.

MBA estimates that there were 50,000 new home sales in April 2017, a decrease of 19.4 percent from 62,000 new home sales in March. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.