A custom white fence surrounds this custom home built by Ron Lee Homes.

Ninety Percent of New Home Sales In Q1 2021 Were Backed by Conventional and FHA Mortgages

The recent Quarterly Sales by Price and Financing, published by the U.S. Census Bureau, was analyzed by the National Association of Home Builders and found that conventional loans financed the largest share of new home sales since 2018.

Conventional loans in Q1 2021 were reported at 71.6%, FHA came in at 19.3%, VA loans at 5.3% and cash new home sales were 4.1%. As far as the percentage points increase from Q1 2020, conventional loans rose 2.1 percentage points and FHA-backed sales were up 1.6 percentage points. Unfortunately, VA loans decreased 2.1 percentage points and cash sales dipped 0.9 percentage points.

The four-quarter moving average (MA) of the share of new home sales backed by FHA has increased over the past two and a half years from 12.2% to 18.9%. Conventional loans however have seen a 4.4 percentage points decrease during the same period.

Even with a small increase, interest rates are still at historically low levels. The stock market returns topping 20% from Q1 2020 to Q1 2021 have played important roles in the large increase in the number conventional loan and cash purchases relative to sales financed through the FHA and VA.

Now is a great time to purchase a home with low-interest rates and in turn a great time to also sell. The national median sales price for a new home reported was $347,500 and those homes sold back by financing were $386,600.

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