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Applications to purchase new homes remain skewed toward higher-priced homes, the Mortgage Bankers Association reports.
The average loan size for a new home soared to a record high last month, reaching $423,102, the MBA reports. That marks an increase from $414,114 in November on new-home loan sizes.
Higher sales prices are following higher building costs. They’re also sidelining the buyers who are priced out of a new home. Mortgage applications for new-home purchases fell 5% in December 2021 compared to November and are down by 7.1% from December 2020.
“Applications to buy a new home slowed in December, while the activity remains tilted to higher-priced homes,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “Supply chain challenges, labor shortages, and higher materials costs also contributed to last month’s decline, as projects were delayed or cost more to complete.”
The MBA also recently reported a record high average dollar amount of a mortgage purchase application overall—for both existing and new homes—to $418,500.
“The continued rise in purchase loan application sizes is driven by high home price appreciation and the lack of housing inventory on the market—especially for entry-level homes,” Kan said.
The larger loan balances also are occurring while government loans are making up a lesser share. On new-home applications, conventional loans comprised 77% of loan applications, while FHA loans accounted for 12.6%, VA loans 9.8%, and USDA/RHS 0.4%.