New home sales surge in January

Sales of new homes surged in January following a much slower pace the previous two months, according to a new survey. 

The Mortgage Bankers Association (MBA) reported on Thursday that sales hit a seasonally adjusted annual rate of 543,000 units in January, an increase of 35 percent from December’s pace of 402,000, according to the group’s builder applications survey.

{mosads}The group argued that, even though the data appear to conflict with MBA’s purchase application index and the National Association of Realtors’ existing home sales data, which shows weak growth, this estimate is “consistent with reports of homebuilder sentiment that show strength in the market for new homes,” said Mike Fratantoni, MBA’s chief economist.  

“It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December,” he said. 

On an unadjusted basis, the MBA estimates that there were 38,000 new home sales last month, a 36 percent increase from the 28,000 units in December.  

Mortgage applications for new home purchases increased by 27 percent last month compared with December, which is not seasonally adjusted.

All told, 69.4 percent were conventional loan applications while Federal Housing Administration loans represented 15.9 percent of the total. 

Meanwhile, the average loan size of new homes decreased to $289,358 in January from $300,444 in December.