Data released by the Mortgage Bankers Association last week showed that demand for new home purchases fell by 11 percent in December, following a sharp decline of 18 percent in November.
MBA’s Builder Application Survey showed the average loan size of new homes rose slightly from $295,523 in November to reach $300,444 in December.
Conventional mortgage loans accounted for 63 percent of loan applications, while FHA loans comprised 19.2 percent, RHS/USDA loans composed 0.9 percent and VA loans accounted for 16.9 percent.
MBA estimated that sales of new single-family homes totaled 28,000 in December. New home sales for all of 2013 averaged 445,000, slightly below MBA’s forecast of 449,000.
The survey tracks application volume from home builder mortgage subsidiaries across the U.S.
MBA forecasts mortgage originations to total between $57 billion and $1.12 trillion for 2014, based on falling mortgage application activity and rising interest rates.
“Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing—likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage rule,” MBA Chief Economist Mike Fratantoni said. “As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014. Purchase originations are now expected to be $677 billion for 2014, compared to $711 billion forecast previously. Compared to 2013, purchase originations are expected to increase by 3.8 percent.”