New home mortgages fell to 13-month low in June

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Buying a new building application volume dropped every month in the second quarter, while construction costs and low inventories led to record high loan amounts.

June applications dropped by 3% since May and 23.8% over the same period last year, according to a study by the Mortgage Bankers Association on Application for Developers.

The annual seasonally adjusted estimate of 704,000 units in June is down 5% from 741,000 units in May. This is the lowest since May 2020. The annual sales rate over the past three months is about 7% lower than the 2020 average, according to Joel Kahn, MBA’s deputy vice president of economic and industry forecasting.

“Recently, home builders have faced more serious problems as prices for key building materials, rising regulatory costs and labor shortages affect their ability to increase production, ”Kahn said in the report. “In addition, the still low levels of stock for sale are also pushing prices up as competition for available units among potential buyers remains high.”

Unadjusted estimates showed that 66,000 new homes were sold in June, up from 68,000 in May and 71,000 years ago… Despite the fact that activity has slowed, the average size of the mortgage for a new home rose for the fifth consecutive month and reached a new high of $ 392,370, compared with $ 384,323 in May and $ 338,589 a year earlier.

“In addition to rising prices, we are also seeing a decrease in the number of purchases at lower price levels as more potential buyers are excluded from the market, further putting upward pressure on loan balances,” Kahn said.

Ordinary loans accounted for 74.4% of new home loan applications, up from 73.9% in May and 65.1% in June 2020. Loans insured by the Federal Housing Administration accounted for 14%, down from 14.8% per month and 22.6% per year. Department of Veterans Affairs guaranteed mortgages rose to 10.6% from 10.4% and 11.2%, while Housing and USDA loans took the remaining 1% from 0.9% and 1%. % respectively.





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