New home purchase loan application activity reached its highest point in March as builders looked to fill the growing demand for housing.
"The pickup from a fairly modest February showing suggests that developers are finding ways to bring new product on line to help supplement otherwise low inventories of existing homes for sale in the U.S.," said Lynn Fisher, MBA vice president of research and economics, in a press release.
The Builder Application Survey Index increased 23% from February and 5% from the year prior. March's index was the highest since the Mortgage Bankers Association started this survey in 2012.
"In contrast to the increasing trend in average loan size in our Weekly Application Survey which reports on applications for both new and existing homes, the average loan size for new homes in March from the builder survey was unchanged from a year ago. Looking at the full distribution of applications, nearly two-thirds of applications for new homes in our survey have loan sizes between $200,000 and $400,000," she added.
Approximately two-thirds of buyers, 67.5%, were seeking conventional loans. Applications for Federal Housing Administration-insured loans made up 18.6%, Veteran's Affairs-guaranteed loans were 12.8% and U.S. Department of Agriculture/Rural Housing Service loans composed 1%. The average loan size for a new home purchase decreased to $328,192 in March from $330,208 in February.