More FHA Loans for the Purchase of New Homes

The share of new single-family homes purchased with financing from FHA mortgage loans rose to 16% of all new home sales in the first quarter of 2015, according to MarketWatch report based on data from the U.S. Census Bureau. This is the largest share which FHA loan-financed new home purchases have reached in 2 years.

On a year-over-year basis, the first-quarter share of new homes purchased with FHA mortgage rose by 3 percentage points to reach 16%. The increase on a quarter-over-quarter basis was two times higher. The share of new home purchases financed with a mortgage backed by the Federal Housing Administration rose by 6 percentage points from the final quarter of 2014 to the first quarter of 2015.

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The share of VA loans used for the purchase of new single-family homes rose from the fourth quarter of 2014 to the first quarter of 2015 as well. It experienced an increase of 1 percentage point from 8% to 9%.
The share of new home purchases financed with conventional mortgage loan traditionally remained the highest in the first quarter of the year. It stood at 71%. Still, it experienced a small decline of 2 percentage points on a quarter-over-quarter basis. The share of all-cash new home sales declined by 6 percentage points from 10% in the final quarter of 2014 to 4% in the first quarter of 2015.

The MarketWatch analysis attributes the increase in the share of new home purchases financed with an FHA loan with a set of factors including rising rental rates and the improvement in the labor market experienced in the first quarter of the year. The reduction in the annual premium insurance rates for these mortgage loans played a major positive role. The higher demand for FHA loans is also caused by the low mortgage rates. According to the latest data from the MBA, the average contract rate on this type of loan with a term of 30 years and a fixed interest rate remains below 4%.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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