The Mortgage Bankers Association (MBA) noted a significant increase in new home sales in October.  MBA's estimate is based on responses to its Builder Application Survey conducted among mortgage subsidiaries of home builders across the country.  Sales increased by 8.5 percent from the September seasonally adjusted annual rate of 425,000 units to 461,000 units.

On an unadjusted basis MBA estimates that there were 36,000 new home sales in October, a 12.5 percent increase from September sales of 32,000 unit.  MBA bases its estimate on mortgage applications for new home purchases as well as assumptions regarding market coverage.

 "Applications for new home purchases picked up in October, particularly for higher priced homes," said Mike Fratantoni, MBA's Chief Economist.  "The continued improvement in the job market and still low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level."

MBA said that 68.2 percent of the applications for new home purchase were for conventional mortgage loans.  FHA loans comprised 16.2 percent, VA loans 14.2 percent and Rural Housing Service (USDA) loans 1.5 percent.  The average size of a loan for a new home increased to $300,289 from $298,274 in September.

MBA provides its survey data as 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 on a monthly basis.  In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.