New Home Purchase Mortgage Applications Drop 13 Percent in December, MBA Reports

The Mortgage Bankers Association this morning reported December mortgage applications for new homes fell by 13 percent from November and by 6.1 percent from a year ago.

In a separate report yesterday, the National Association of Home Builders reported its January Housing Market Index stabilized amid lower interest rates.

MBA Builder Applications Survey data for December showed new home applications fell for the second consecutive month. By product type, conventional loans composed 69.5 percent of loan applications, FHA loans composed 17.3 percent, RHS/USDA loans composed 0.7 percent and VA loans composed 12.5 percent. The average loan size of new homes increased from $326,037 in November to $334,944 in December.

"Factors such a volatile stock market and economic uncertainty both here and abroad likely kept some prospective buyers away," said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. "This pullback in activity was in spite of falling mortgage rates and a job market still running on all cylinders. Looking ahead, if mortgage rates remain low, home-price growth continues to moderate and housing inventory rises, we do expect to see a rebound in purchase activity come spring."

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