Mortgage applications for new home purchases decreased in December compared to the year prior, with most of the activity leaning toward higher-priced homes.
Applications decreased 7.1 percent in December compared to 2020, and decreased 5 percent from November, according to the Mortgage Bankers Association Builder Application Survey.
These percentages were not adjusted for typical seasonal patterns.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, said supply chain challenges, labor shortages, and higher material costs contributed to the decline.
Projects either were delayed or cost more to complete, leading to an average loan size of $423,102 in December. This figure marks another survey record.
The MBA estimates new single-family home sales were at a seasonally adjusted annual rate of 887,000 units in December. This is a decrease of 2 percent from November’s 905,000 units.
MBA’s unadjusted estimate is 60,000 new home sales in December, which is a decrease of 7.7 percent from 65,000 sales in November.
Most of the loan applications were for conventional loans, at 77.2 percent, followed by FHA loans at 12.6 percent.
The average loan size in November was $414,114.
Overall mortgage loan applications for the week ending Jan. 14 were up 2.3 percent from the week prior.
As mortgage rates rise and fluctuate, interested buyers typically flock to their lenders when any dips occur, experts say.
These buyers are looking for the best rate in the current circumstances. Experts say that although rates are rising, they are remaining historically favorable.
Some consumer trend experts are turning their focus to homeowners who are interested in selling this year but want to make some return on investment home improvement projects first to earn the biggest profit.
These types of projects might include sprucing up entryways and outdoor spaces, adding a fresh coat of paint around the home, or completely updating the kitchen, bathroom, or flooring, according to trend experts.
With record amounts of equity still locked up in homes due to high home prices, market experts are encouraging homeowners to look into a cash-out refinance to help with home improvement projects.
But whether a borrower wants to sell, purchase, or refinance this year, experts say to be sure to shop around for the best rate.
A borrower’s best personal rate is based on several factors, industry experts say, including credit score and down payment amount.