Sales of new homes have seen their largest annual increase since July

New home sales in November saw their largest year-over-year increase since July Mortgage interest rates changed little.

Process content

While the industry is still waiting for official data from the Census Bureau on the pace of new home sales, the MBA’s latest Builder Application survey shows that new home purchasing activity is up 3.1% from a year ago, but Down 7% compared to October on an unadjusted basis.

“Mortgage rates have remained in a narrow range and inventories of both new and existing homes on the market have increased,” Mike Fratantoni, chief economist at the MBA, said in a news release on Tuesday. “Potential buyers have more homes to choose from, and removing supply constraints leads to a stronger sales pace.”

The 30-year fixed mortgage rate rose to 6.22% in the first week of November and ended the month at 6.23%, according to Freddie Mac. It currently rests at 6.22%causing rates to rise by three basis points, despite the Federal Open Market Committee cutting the federal funds rate by 25 basis points last week.

Actively listed properties rose 12.6% in November compared to the same time last year, the 25th consecutive month of annualized gains. But inventory is still 11.7% below 2017-2019 levels in November, according to Realtor.com.

The drop in new home sales between October and November isn’t nearly as steep on a seasonally adjusted basis, down 2.1% from a pace of 771,000 units. On an unadjusted basis, 51,000 new homes were sold last month, down 7.3% from 55,000 in October, the MBA said.

The MBA also estimates that sales of new single-family homes, a leading indicator of the U.S. Census Bureau’s New Residential Sales report, reached a seasonally adjusted annual rate of 755,000 units last month. This number is derived from the research and assumptions about market coverage, the press release said.

By product type, conventional loans lost some of the number of applications last month, from 51.9% to 49.5%.

Department of Veterans Affairs-guaranteed loans and Federal Housing Administration loans saw their shares rise to 12.7% and 37.1%, respectively, from 12.3% and 35.1%. U.S. Department of Agriculture-backed loans maintained their 0.7% share.

The average loan size for new homes also fell to $378,063 from $381,404 in October, perhaps providing a slight boost to activity.

“New homebuyers continue to look for ways to increase their purchasing power or lower monthly payments, with 37 percent of new homebuyers using a mortgage opting for an FHA loan, and 24% opting for an ARM loan,” Fratantoni said.