The Mortgage Bankers Association on Monday predicted a sharp increase in new home sales in June as homes on the market remain scarce.
“The shortage of existing housing supply should keep pressure on prices and new homebuilding throughout the balance of this year and into next,” said Lynn Fisher, MBA’s vice president of research and economics.
The MBA’s monthly Builder Application Survey (BAS) data for June 2017 released Monday shows mortgage applications for new home purchases increased 10% compared to June 2016. Based on those applications and other data, the Washington, D.C., association estimated there were 55,000 new home sales in June 2017, or 628,000 units on an annualized, seasonally adjusted basis.
The June sales estimate is 3.8% higher than sales in May and 18% higher than sales in June 2016.
“We are at the part of the season where housing market activity normally begins to slacken, and this was true for mortgage applications for new homes in June. That said, activity was up by 10% relative to one year ago,” Fisher said.
Conventional loans made up 70% of loan applications. FHA loans were 16.7%, RHS/USDA loans were 1.3% and VA loans were 12%. The average loan size of new homes rose from $324,844 in May to $327,833 in June.
On July 12, MBA reported that its Market Composite Index, a measure of the volume of all mortgage loan applications, fell 7.4% on a seasonally adjusted basis from a week earlier. Refinances were 42.1% of total applications, down from 44.9% the previous week.
Refinances were 48% of the $1.89 trillion in residential mortgages originated last year. Of the $361 billion in residential mortgages originated in the first quarter, $149 billion, or 41%, were from refinances.
MBA expects second-quarter statistics will show the refinance share fell to 32% in the second quarter. It estimates total U.S. mortgage portfolios ended the second quarter at $9.85 trillion, up 3.8% from a year earlier.
Credit unions have been gaining share. For all lenders, mortgage portfolios ended the first quarter at $9.75 trillion, up 3.5% from a year earlier. Credit unions’ first-lien mortgages grew 9.9% to $368 billion in the first quarter, and their second-lien mortgages grew 4.7% to $79.4 billion.
