Applications for New Home Purchases Rise 8% in October

Applications for new home purchases picked up in October, particularly for higher-priced properties, according to the Mortgage Bankers Association.

The Mortgage Bankers Association Builder Application Survey revealed that mortgage applications for new home purchases increased 8.5% in October compared to the previous month.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 461,000 units in October. A month earlier, the pace was 425,000 units, the Washington-based trade group said.

Conventional loans composed 68.2% of all applications, the MBA said. Federal Housing Administration loans accounted for 16.2% of the requests, while Veterans Affairs loans consisted of 14.2% and USDA loans represented 1.5%.

The average loan size of new homes increased to $300,289 in October from $298,274 the month before.

The new home sales estimate is derived using assumptions regarding market coverage as well as mortgage application information from the MBA's builder application survey which tracks application volume from homebuilders nationwide.

"The continued improvement in the job market and still-low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level," said Mike Fratantoni, chief economist for the Mortgage Bankers Association.