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March 2024 » thefivestar.com 61 March 2024 J O U R N A L increased by 1.9%, and the Conforming MCAI rose by 0.2%. "There was a slight increase in credit availability in January, driven by a greater number of conventional loan program offerings. However, overall credit availability remained close to 2012 lows, and the con- ventional index was close to its record low in the series dating back to 2011," said Joel Kan, MBA's VP and Deputy Chief Econo- mist. "Even though there was an increase in cash-out refinance programs available, credit supply overall is tight. The challeng- ing lending environment has pushed many lenders to reduce costs by cutting back on certain aspects of their business, including exiting origination channels, which has contributed to lower credit supply." The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodolo- gy as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices is the population of loan programs that they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines nongov- ernment loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI ex- amines conventional loan programs that fall under conforming loan limits. A primary market driver may have been news from the Bureau of Labor Statistics (BLS) in a time that is histor- ically a down time in the employment sector, January 2024 reversed course and rose in a big way, as the Bureau of Labor Statistics (BLS) reported that the nation's employment rose by 353,000 jobs in Jan- uary 2024, and the unemployment rate remained at 3.7% nationwide. The BLS found job gains occurring in professional and business services, healthcare, retail trade, and social assistance, while employment declined in the mining, quarrying, and oil and gas extraction industries. "The strong job market is good news for the spring buying season as higher household incomes are a necessary com- ponent, but it also means that mortgage rates are not likely to drop much further at this point," MBA's SVP and Chief Economist Mike Fratantoni said. Coming out of January and into February, the MBA also reported that mortgage applications rose 3.7% from one week earlier, for the week ending February 2, 2024. Freddie Mac's latest Primary Mort- gage Market Survey (PMMS) shows the 30-year fixed-rate mortgage (FRM) aver- aged 6.64% as of February 8, up slightly from last week when it averaged 6.63%. A year ago, at this time, the 30-year FRM averaged 6.12%. "Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market," Kan added. "Rates at these levels have not prompted much of a reaction in the refinance mar- ket, as most homeowners have mortgages with much lower rates. Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply." Sam Khater, Freddie Mac's Chief Economist, noted, "The economy and labor market remain strong with wage growth outpacing inflation, which is keeping consumer spending robust. Meanwhile, affordability in the housing market is an ongoing issue due to contin- ued high home prices, elevated mortgage rates, and low supply of homes on the market, particularly for first-time and low-income homebuyers." NEW HOME PURCHASE MORTGAGE APPLICATIONS UP YOY A ccording to new data from the Mortgage Bankers Association's (MBA) Builder Application Survey (BAS) for January 2024, there was a 19.1% rise in mortgage applications for the purchase of new homes over the previous year. In December 2023, there was a 38% rise in applications. According to MBA estimates, new single-family home sales in January 2024 were running at a seasonally adjusted annual pace of 700,000 units. These sales have continuously been a leading indi- cation of the U.S. Census Bureau's New Residential Sales report. "Applications for new home purchas- es were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month," said Joel Kan, MBA's VP and Deputy Chief Economist. "Appli- cations were up 19% from a year ago—the 12th consecutive annual increase—and the non-seasonally adjusted index was the strongest January reading in the survey's history. The seasonally adjusted annual- ized pace of new home sales was 700,000 units, the highest sales pace since October 2023." According to MBA, the total number of new single-family home sales in January 2024 was 700,000 units, a seasonally ad- justed annual rate. This number continues to be a leading indicator of the U.S. Census Bureau's New Residential Sales report. In January, the seasonally adjusted estimate is higher by 16.9% compared to the December rate of 599,000 units. MBA projects that, on an unadjusted basis, there were 63,000 sales of new homes in January 2024, up 37% from 46,000 sales in December. Conventional loans accounted for 64.5% of loan applications by product type, followed by FHA loans (24.8%), RHS/ USDA loans (0.4%), and VA loans (10.3%). In December, the average loan amount for new homes was $405,368; in January, it was $401,282.