October new mortgage applications fall by 2.6%

“Increased use of ARM loans, whose rates averaged nearly 80 basis points lower than fixed-rate loans, also contributed to the increase in revenue and a slightly higher average loan size, the third monthly increase. In October, our data showed that ARM loans accounted for 25% of applications, up from 16% a year ago.”

Kan added that MBA’s estimate of new home sales is an important indicator of the US Census Bureau‘s new home sales figure, which has not been published since the data was released in August prior to the federal government shutdown.

“Unadjusted mortgage applications fell slightly last month, but remained at a healthy pace compared to the last three years,” he said.

MBA estimates that sales of new single-family homes rose to a seasonally adjusted 771,000 in October, up 13.4% from September’s pace of 680,000 units.

On an unadjusted basis, MBA projects, 55,000 new homes were sold in October, an increase of 1.9% compared to the previous month.

Conventional loans accounted for 51.9% of applications, followed by Federal Housing Administration (FHA) loans at 35.1%, The U.S. Department of Veterans Affairs (VA) loans at 12.3% and US Department of Agriculture (USDA) loans at 0.7%. The average loan size rose to $381,404 in October, up from $379,107 in September.

MBA’s estimate is based on data from the Builder Application Survey, which tracks mortgage applications from affiliated homebuilders.