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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 60 May 2024 J O U R N A L 'Tis the Season "March is typically a month when new home purchases see a seasonal boost, but this year, March applications for new home purchases saw less than a 1% increase over the prior month on an unadjusted basis," said Joel Kan, MBA's VP and Deputy Chief Economist. "Ap- plications were still ahead of last year's pace, but at 6%, the annual growth rate was the slowest since September 2023. Homebuyers remain adversely impact- ed by strong home-price growth and mortgage rates hovering around 7%. The FHA share of applications did increase in March, exceeding 26%, compared to a 24% average for the prior 12 months. A higher FHA share can be a sign of more first-time buyer activity, but that segment of buyers is also more sensitive to afford- ability challenges." MBA estimates new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau's New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 615,000 units in March 2024. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regard- ing market coverage and other factors. The seasonally adjusted estimate for March is a decrease of 10.7% from the February pace of 689,000 units. On an unadjusted basis, MBA estimates that there were 60,000 new home sales in March 2024, a decrease of 3.2% from 62,000 new home sales in February. "MBA's estimate of new home sales fell more than 10% over the month to a seasonally adjusted pace of 615,000 units, the slowest annual pace in four months," Kan added. The State of Mortgage Rates And while the year has begun with mortgage rates hovering in the mid-6% range, Freddie Mac reported that April began with the 30-year fixed-rate mort- gage (FRM) leaping toward the 7%-mark, settling at 6.88% for the week ending April 11. The National Association of Home Builders (NAHB) reported that builder sentiment was flat in April, as mortgage rates maintained in the 6.5%-7% range, and the latest inflation data failing to show improvement during Q1 of 2024. According to the NAHB/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built single-family homes stood at 51 in April, unchanged from March—breaking a four-month period of gains for the Index. "Builder sentiment was flat in April, but remains above the break-even point of 50, indicating positive sentiment," First American Deputy Chief Econo- mist Odeta Kushi said. "The long-term housing shortage, coupled with a lack of existing-home inventory and builders' ability to offer incentives has helped to buoy new single-family construction. However, builders continue to grapple with challenges stemming from the 'five Ls'—labor, lots, legal issues, lumber, and lending. 'Higher-for-longer' mortgage rates are also a major headwind for builders and potential home buyers alike." "March is typically a month when new home purchases see a seasonal boost, but this year, March applications for new home purchases saw less than a 1% increase over the prior month on an unadjusted basis." —Joel Kan, VP and Deputy Chief Economist, MBA