Purchase demand for homes still isn’t going anywhere, according to the latest U.S. Housing Data Response report from Matthew Pointon, property economist at Capital Economics.

Pointon explains that the lackluster mortgage demand reflects the low inventory of homes for sale, particularly cheaper homes, but it also suggests that credit barriers may be holding potential home buyers back, as well. 

“Potential buyers see little point in applying for a mortgage when there are no homes available to buy,” the report said. “Admittedly, that lack of inventory has not prevented a surge in home sales in the final few months of the year. But, with mortgage applications for home purchase flat, cash-buyers must be making up a greater share of home sales. In turn, that suggests credit conditions are still acting as a barrier for many Americans, with the requirement for a high credit score a key constraint.”

This continues Pointon’s sentiments that apps are going to struggle in 2018. In the report, Pointon waxes that tax reform will provide most households a boost in spending money, but with rate hikes in sight and low inventory, applications aren’t likely to see an increase.

From the report:

“Tax reform this year will give most households a boost to their disposable income, and that may give some the confidence to apply for a mortgage. But, with mortgage interest rates set to rise, credit conditions to remain tight and inventory levels low, applications for home purchase in 2018 are likely to continue to struggle to gain upward momentum.”