Share of Non-Conventional Financing Holds Steady in 2022


NAHB analysis of the 2022 Census Bureau Survey of Construction (SOC) data shows that, nationwide, the share of non-conventional financing for new home sales accounted for 28.1% of the market, roughly the same as in 2021, at 28.8%. As in previous years, conventional financing dominated the market at 71.9% of sales. In 2020, the share of non-conventional financing was 34.4% of the market while conventional financing accounted for 65.6% of the market share. Non-conventional forms of financing, as opposed to conventional mortgage loans, include loans insured by the Federal Housing Administration (FHA), VA-backed loans, cash purchases and other types of financing such as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds. The reliance on non-conventional forms of financing varied across the United States, with its share at 34.0% in West South Central but accounting for only 14.9% of new single-family home starts in the Middle Atlantic division. Nationwide, cash purchases were the majority share of non-conventional financing of new home purchases, accounting for 13% of the market share up from 11% in 2021. FHA-backed loans accounted for 8% which is lower than in 2021, where it was 11% of the market share. The share of VA-backed loans was at 4% market share in 2021 while Other Financing was 3% of market share. Cash financing dominated non-conventional forms of financing in East South Central, where 24.2% of all homes started were purchased with cash. Except for West South Central, cash purchases led non-conventional financing all other census regions. Cash purchases accounted for 23.3% in New England, 10.1% in Middle Atlantic, 17.6% in East North Central, 12.6% in West North Central, 12.1% in South Atlantic, 10.3% in Mountain, and 9.7% in Pacific. FHA-backed loans accounted for the majority of all non-conventional financing in the West South Central division accounting for 12.9% of the homes started. New England division reported the lowest FHA-backed loans with none of the homes started in 2022 were purchased with FHA-backed loans. VA-backed loans were most used in the Mountain division, which accounted for 6.7% of non-conventional forms of financing. In New England, VA-backed loans were only 0.3%, the lowest market share for this category. Other financing such as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds was highest in West South Central where it was 6.3% of market share, while Middle Atlantic division reported the lowest share at 0.6%. Related ‹ Large Metro Markets Show Biggest Slowdown in Single-Family ConstructionTags: conventional loans, FHA, new home cash purchases, nonconventional loans, SOC, VA loans

Share of Non-Conventional Financing Holds Steady in 20222023-09-06T09:22:17-05:00

New Home Sales Increasingly Backed by FHA Loans


NAHB analysis of the most recent Quarterly Sales by Price and Financing report reveals that the share of new home sales backed by FHA loans climbed from 12.1% (revised) to 14.0% in the second quarter of 2023. It is the largest share since Q1 2021 but roughly three percentage points lower than the post-Great Recession average. Conventional loans financed 73.7% of new home sales, down one percentage point over the quarter and 2.7ppt, year-over-year. The share of VA-backed sales edged up from 5.2% to 5.4%, a 0.8 ppt decline over the past year. Cash purchases made up 6.5% of new home sales in the second quarter of 2023. The share has declined each of the past two quarters and is down 4.2 ppt over that period. The share of cash purchases has decreased 2.9 percentage points over the past year and has ranged from 4.1% to 10.7% since Q2 2020. Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 26% of existing home transactions were all-cash sales in June 2023, up from 25.0% in May and June 2022. Price by Type of Financing Different sources of financing also serve distinct market segments, which is revealed in part by the median new home price associated with each. In the second quarter, the national median sales price of a new home was $416,100. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $458,100, $346,500, $392,600, and $364,800, respectively. The purchase price of new homes declined over the past year, regardless of means of financing. The largest drop occurred in cash sales prices which fell 20.1% over the year. This is in stark contrast to year-over-year price changes in the second quarter of 2021 and 2022 (see below). Related ‹ Homeownership Rates for Households Aged Under 35 Fell to 38.5%Tags: conventional loans, conventional loans market share, existsing home sales, FHA, FHA loans, finance, home price appreciation, housing finance, lending, mortgage lending, new home cash purchases, new home prices, new home sales, sales by financing, VA

New Home Sales Increasingly Backed by FHA Loans2023-08-03T08:24:32-05:00

About My Work

Phasellus non ante ac dui sagittis volutpat. Curabitur a quam nisl. Nam est elit, congue et quam id, laoreet consequat erat. Aenean porta placerat efficitur. Vestibulum et dictum massa, ac finibus turpis.

Recent Works

Recent Posts