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A study by the Urban Institute suggests that 1.22 million mortgage purchases could have been made in 2012 had credit availability remained at 2001 levels. The group claims that tight credit conditions are limiting both housing and economic recoveries. The report notes that originations in 2005 were 6 million, dropping to 2.74 million in 2012, a 44.4 percent decline. The report found that borrowers with less than pristine credit were most affected. Borrowers with credit scores ranging from 660 to 750 declined by 46 percent, and borrowers with credit scores below 660 declined 70 percent from 2001 to 2012.
Along with tight credit conditions, race also played a factor in the decline of loan originations. From 2001 to 2012, the number of purchase loans to African American and Hispanic borrowers declined by 55 and 45 percent respectively. In contrast, purchase loans to non-Hispanic whites and Asians dropped 41 and 15 percent, respectively. Florida was the hardest-hit state, with a 61 percent drop in purchase loans, due to a larger overhang of foreclosed properties. The Urban Institute is calling for a loosening of credit availability to help both housing and economic recovery nationwide.
Builder confidence barely moved in March after falling in February to the lowest level in nearly a year. According to the National Association of Home Builders Housing Market Index, the index moved up one point this month to 47, still shy of the 50 point benchmark that separates a market perceived as either good or bad. David Crowe, NAHB's chief economist, said the March survey results reflect builders' worries about meeting demand, specifically a shortage of buildable lots, skilled workers, rising materials prices, and a low inventory of homes for sale.
