The National Association of Home Builders is confident in the housing recovery and hopes the mortgage market can keep up.
New single-family home sales rose 5.7% from August to September, with 389,000 homes sold last month according to the U.S. Census Bureau. The median sales price of a home in September hit $242,400 while the average price hovered at $292,400.
NAHB chairman Barry Rutenberg said consumers, who are sitting on the sidelines, are now more willing to purchase homes as long as they meet the guidelines for obtaining a good mortgage. He called current underwriting practice for mortgage approvals, "exceedingly strict."
The number of mortgage applications filed by potential homebuyers and refinancing borrowers fell 12% for the week ending October 19, according to the Mortgage Bankers Association.
"Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today's data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation,” he said.
The inventory of new homes for sales pace saw a slight increase with a 4.5-month supply to the 145,000 units.
NAHB chief economist David Crowe of the National Association of Home Builders said builders are continuing to have a time acquiring construction credits, although consumer demand is rising.
"Meanwhile, despite a small increase in the inventory of new homes on the market in September, the number of completed new homes for sale is now at an all-time low and the month's supply is at its tightest since October 2005," he said.