New Home Buyers Push Demand for Mortgage Applications Up 33% from Last Year

A report by the Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for August 2020 showed that mortgage applications for new home purchases increased 33.3 percent compared from a year ago. Compared to July 2020, applications decreased by 4 percent. 

Applications to refinance a home loan declined 10% for the week but were 34% higher annually.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 decreased to 3.11% from 3.13%. Points, including the origination fee, increased to 0.38 from  0.36 for loans with a 20% down payment.

“The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite economic uncertainty and the pandemic’s distortion to typical seasonal patterns, the comparisons to August 2019 show strength. Purchase applications increased over 33 percent, and MBA’s estimate of new home sales were up over 11 percent. The seasonally adjusted annualized rate of sales was 871,000 units in August, the second strongest of the year and well above the 785,000 units sold a year ago.” Added Kan, “The new home market has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.”