It is a slow start to the Spring home purchase season, at least in terms of newly constructed residences,
This lackluster performance echoes
"March is typically a month when new home purchases see a seasonal boost, but this year March applications for new home purchases saw less than a 1% increase over the prior month on an unadjusted basis," said Joel Kan, the MBA's deputy chief economist, said in the group's Builder Application Survey press release. "Applications were
Continuing high rates of home price appreciation, as well as
The one bright spot has been in applications for Federal Housing Administration-insured mortgages.
"The FHA share of applications did increase in March, exceeding 26%, compared to a 24% average for the prior 12 months," Kan said. "A higher FHA share can be a sign of more first-time buyer activity, but that segment of buyers is also more sensitive to affordability challenges."
The MBA estimated the annual pace of new home sales in March to be a seasonally adjusted 615,000 units, a decline of 10.7% from February's 689,000, and the slowest rate in four months.
New home sales fell 3.2% on an unadjusted basis to 60,000 units, compared with 62,000 in February.
Conventional loans (both conforming and jumbo) were sought by 63% of new home buyers in March. The remaining share went to government-guaranteed products: FHA made up 26.4% while Veterans Affairs loans were 10.4% of new home applications and the U.S. Department of Agriculture Rural Housing Service program was 0.3%. The average loan size for new homes decreased to $405,400 in March from $405,719 in February.
Mortgage rates that are likely to stay higher for longer are a drag on the Spring housing market for existing homes, the First American Data & Analytics Home Price Index report for March found.
"Many sellers will remain on strike keeping a lid on supply," First American Financial Chief Economist Mark Fleming said in a press release. "However, as we saw last fall when mortgage rates peaked, demand may also wane. Even though the supply of homes for sale will remain tight, sagging demand should further slow price appreciation in a 'higher-for-longer' mortgage rate environment."
In March, First American estimated that prices rose 0.9% from the prior month, a slightly slower pace than the revised 1% month-to-month gain recorded in February. Year-over-year, prices rose by 6.2%, also down from the 6.3% annual increase one month prior.
