Despite purchase prices rising, the Mortgage Bankers Association (MBA) says there has been a steady increase in purchase applications in a recent month-to-month study. Based on the applications, single-family home sales rose 3%, from 66,000 in September to 68,000 in October 2021.
Although new home purchases were down 15% from October 2020, they have steadily increased monthly, amounting to 6% higher in October 2021 than September 2021. This makes the increase the strongest pace since January of this year.
In addition to higher home sales, home loan balances were also pushed to a new record at an average of $412,339 in October compared to September’s average of $408,522. Of these loans, Conventional loans accounted for 75.7% of applications, FHA loans and VA loans comprised 13.5% and 10.3% respectively, and RHS/USDA loans had an 0.5% share.
Moreover, an increase of new sales are for homes that have yet to be built, or are currently under construction as opposed to completed homes. This reflects the strong demand of buyers even in the midst of an extremely competitive housing market.
The reason behind these rising prices is still due largely to supply-chain bottlenecks as construction costs recorded an annual increase of 12.3% in October. This measures almost five times the average annual change with no indication of slowing down.
If you have any questions based on this study, or about the current housing market in general, please contact us at (760) 930-0569 and one of our loan officers will assist you.