Mortgage applications for new-home purchases fell 9% on a monthly basis and 5.9% on a year-over-year basis in May, the Mortgage Bankers Association reported, citing its Builder Application Survey.

“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”

The seasonally adjusted annualized pace of sales dropped 3.8% in May on a monthly basis to 741,000 units. The rate of sales reached a survey high of 927,000 units in October 2020, the MBA said in a press release.

On an unadjusted basis, the association estimated that there were 68,000 new home sales in May, down 5.6% from 72,000 sales in April.

By product type, conventional loans composed 73.9% of loan applications, while Federal Housing Administration loans comprised 14.8%, and Veterans Administration loans accounted for 10.4%. The average loan size for new homes rose to $384,323 in May from $377,434 in April.