The Mortgage Bankers Association (MBA) expects there will be a sharp downturn reported in July sales of newly constructed homes.   While its Builder Applications Survey (BAS) data for the month shows mortgage applications for new home purchases remained higher than a year earlier, by 5.1 percent, those applications dropped by 12 percent from the numbers reported for June. Mortgage application data from MBA are not seasonally adjusted.

"The year over year increase in applications to homebuilders for new home purchase mortgages slowed down somewhat in July, after relatively strong showings in May and June," said Lynn Fisher, MBA's Vice President of Research and Economics. "Nonetheless, the pattern of applications over the last three months suggests that housing starts will fall off less than expected during late summer and early fall as demand spills over from the low-inventory existing home market into the market for new homes. Year to date, through July, applications for new homes remain up by more than 7 percent compared to the same period last year."

New home sales in July are estimated by MBA at a seasonally adjusted annual rate of 562,000 units. This is a decrease of 10.5 percent from the June rate, estimated at 628,000.  On an unadjusted basis, the MBA estimates that there were 49,000 new home sales in July 2017, a decrease of 10.9 percent from 55,000 new home sales the previous month. The average loan size for purchasing new homes increased from $327,833 in June to $329,483 in July.

By product type, applications for conventional loans accounted for 69.8 percent of the total and FHA loans for 15.7 percent, RHS/USDA loans composed 1.1 percent and VA loans 13.3 percent.

The BAS tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state, and metro level. Official new home sales estimates are conducted by the Census Bureau and are recorded at contract signing, which is typically coincident with the mortgage application. The Census Bureau report for July will be released on August 23.