Conventional Loan Shares Are On The Rise

In 2008 conventional loans made up three-quarters of new home sales and steadily fell to only 57.3% in 2010.  Fortunately reports show a steady increase since 2010 and shares in conventional mortgages have been above 71% over the past two years.

In the first quarter of 2018 they accounted for 74.2% of new home sales and the highest share in ten years according to the U.S. Census Bureau’s Quarterly Sales by Price and Financing. There was a 0.4%-point increase during the first quarter of 2018.

The chart illustrating the New Home Sale by Financing Source shows FHA loans financed 11% of new homes (down from 13.5% in 2017), cash purchases were 5.2% (13,000 new home purchases with a decline of 1.6%) and VA fell 1.8 percentage points to 7.1%. VA loans market share has fallen 40% since the 2008 Great Recession and on average during the housing boom accounted for only 2.4% of new home purchases. Most of the cash purchases were on existing homes as seen in the reported 22% of all cash on existing-home transactions in June 2018.

The decline in sales that were financed by FHA loans and cash is due to the rise in  the conventional mortgage market share. Conventional loans seem to be the route most new home buyers are taking with it comes to financing a home.


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