Loan apps drop in an otherwise record-setting new-home market

Consumer applications for financing with home builders fell in November, contrasting with the average loan amount and sales estimates over the same month, which set new survey records, according to the Mortgage Bankers Association.

Loan apps for new-home purchases fell 2.2% compared to a year earlier and 3% from October as the other two aforementioned numbers hit the highest points seen since the MBA’s survey got underway in 2012. The average loan amount in the past month was $414,114. The estimated seasonally adjusted annual rate of new-home sales was 905,000.

Although seasonal slowing and limited inventory have temporarily reduced the number of mortgage applications, housing starts hit an eight-month high in November, potentially indicating that inventory conditions could improve in the near future.

“A competitive purchase market, combined with increased building materials costs, have been pushing sales prices higher,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release. “There also continues to be a shift to the higher end of the market, which is…contributing to the higher loan amounts.”

In line with the rise in loan amounts, the share of applications submitted for conventional loans climbed to 76.3% from 75.7% the previous month. The percentage of Federal Housing Administration-backed loan apps in the mix fell to 12.2% from 13.5% during the same time period. The share of applications for mortgages guaranteed by the Department of Veterans Affairs declined to 10% from 10.3%. The percentage of Rural Housing Service/U.S. Department of Agriculture loan apps remained below 1%.