Loan application activity for the purchase of newly constructed homes decreased 4% in June from the previous month, according to the Mortgage Bankers Association.
This was the second time in three months that the group's Builder Application Survey showed a decline in activity. While there was a 5.6% month-to-month increase in mortgage applications for newly constructed homes during May over April, there was a 20% drop in volume in April compared with March.
The spring home purchase season normally winds down in June.
However, "activity was up by 10% relative to one year ago," said Lynn Fisher, the MBA's vice president of research and economics, in a press release.
"The shortage of existing housing supply should keep pressure on prices and new homebuilding throughout the balance of this year and into next. The June application data leads us to believe that new home sales in June will come in at 628,000 units on a seasonally adjusted basis which is 18% higher than for the same period last year."
This is an increase of 3.8% from the May pace of 605,000 units. There were 55,000 new home sales on an unadjusted basis in June, down 3.5% from 57,000 in May.
By product type, 70% of new home purchasers applied for a conventional loan, while 16.7% looked to get a Federal Housing Administration-insured mortgage. Veterans Affairs-guaranteed mortgages were sought by 12% of homebuyers, while 1.3% applied for a U.S. Department of Agriculture loan. The average loan size to purchase a new home increased to $327,833 in June from $324,844 in May.