New-home mortgage applications fell again in October, but the seasonally adjusted annual sales pace climbed to its highest level this year, according to the Mortgage Bankers Association.
New-home purchases fell 2.6% year over year and 1% month over month in October, according to the Mortgage Bankers Association's Builder Application Survey. The MBA also estimated that new single-family home sales ran at a seasonally adjusted annual rate of 771,000 units last month, a 13.4% increase from September.
The significant jump in the annual sales estimate comes after particularly
On an unadjusted monthly basis, the MBA estimated there were 55,000 new-home sales last month, a 1.9% rise from 54,000 in September.
"Lower mortgage rates, ongoing usage of builder concessions, and growing levels of for-sale inventory drove an increase in new home sales for October," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release Monday. "The increased use of [adjustable-rate mortgage] loans, for which rates were averaging almost 80 basis points lower than fixed-rate loans, also contributed to the jump in sales and a slightly higher average loan size, the third monthly increase."
ARM loans accounted for 25% of applications in October, up from 16% a year ago.
By product type, conventional loans, Department of Veterans Affairs-guaranteed loans and U.S. Department of Agriculture-backed loans all lost a sliver of their share of applications last month, dropping to 51.9%, 12.3% and 0.7%, respectively.
The Federal Housing Administration insured 35.1% of loan applications for new homes, an increase from 33.8% in September.
The average loan size for new homes also increased to $381,404 in October from $379,107 in September.
While total new-home applications declined monthly and annually for the first time in seven months, they remained at a healthy pace compared to the last three years, Kan said.
What features drive home value?
Unit size and extra amenities can be the difference in whether a new home sells at its asking price in a tighter market.
Home size is one the strongest value drivers in the housing market, as homes between 1,000 and 2,000 square feet add 17% more value than homes under 1,000 square feet, according to the National Association of Home Builders' latest American Housing Survey. Homes with 3,000 square feet or more adds 55% to the market value.
Extra bathrooms and bedrooms, fireplaces and garages each noticeably improve the value of a home as well, but bathrooms have the largest impact as each additional full bathroom increases home value by 32%, the study showed. An additional bedroom adds 5% to the home's value, while a fireplace and garage raise the value by 11% and 10%, respectively.
