New homes saw sustained demand last month, with
The Mortgage Bankers Association reported loan applications for the purchase of new single-family homes in May surging 13.8% year over year and up 1% from April. Volumes were not seasonally adjusted and are based off of survey responses from mortgage units of the nation's builders.
May's numbers reflected a
Although recent reports show the number of existing units slowly increasing, a dearth of listings over the past year
"With existing-home inventory still lagging in many markets, many home buyers have turned their interest toward newly built homes," said Joel Kan, MBA vice president and deputy chief economist.
Sales of new single-family dwellings are now running at a seasonally adjusted annualized rate of 702,000, up 0.4% from 699,000 a month earlier. May's pace came in at its strongest since last October, Kan reported.
On a single-month unadjusted basis, May sales grew 1.6% to 63,000 units from 62,000 reported in MBA's April survey. But the latest total came in lower compared to May 2023's 64,000.
Last month, Redfin reported new homes currently account for approximately one-third of the single-family homes for sale in the U.S. during the first quarter, a share that held steady from 12 months prior. But the percentage of new properties on the market is almost double from where it was pre-pandemic.
As it has in previous months, much of the latest momentum recorded by the MBA came from interest in affordably priced starter homes, with Federal Housing Administration-backed applications rising to 26.5%, inching up from 26.3% in April. The FHA share was the largest since a survey high mark of 27.1% in November 2023, with buyers commonly taking advantage of government-guaranteed programs for a first-time purchase.
Conventional applications garnered 63.4% of loan volume,
The ongoing rise in the new-home market last month also came as interest rates pulled back from an April upturn but still hovered near 7% for much of the month. The average loan size on May's applications tracked lower, coinciding with the rise in the FHA-guaranteed share. The mean amount shrank 1.3% to $400,150 from $405,490 in April.
