The four-quarter moving average share of new home sales financed through FHA was 11.0% in the second quarter of 2022, its smallest share since 2008, according to NAHB analysis of the Quarterly Sales by Price and Financing published by the U.S. Census Bureau. Additionally, the analysis found conventional loans financed a smaller share of new home sales in the second quarter than the first quarter, the first instance in five quarters where the share had declined.
As conventional loan market share falls, the FHA share typically increases and vice versa. Over the past four quarters, the share of new home sales (four-quarter moving average) financed with conventional loans has climbed 4.3 ppts while FHA’s market share has decreased 6.2 ppts.
The share of VA-backed sales rose 0.8 percentage point to 6.1% in the second quarter–0.4 ppts lower than the share one year prior. Cash purchases made up a slightly higher share of sales in the fourth quarter—up 0.6 ppt—as they accounted for 9.2% of the total although the number of sales fell 3,000. The share of cash purchases has climbed four of the past five quarters since reaching its most recent trough of 4.4% and is the largest share since Q4 2014.
The four-quarter moving average share of all-cash new home sales has exceeded that of VA loan backed sales each of the last three quarters. From Q2 2008 through Q3 2021, the cash share had been smaller than the VA share.
The average interest rate of a 30-year fixed rate mortgage increased 103 basis points, quarter-over-quarter—to its highest end-of-quarter reading since Q2 2020. Over the last two quarters, the average rate of a conventional 30-year FRM has spiked 259 basis points.
