Wilkinson said the weaker-than-expected housing number does not fit with rising mortgage purchase applications and could signal that the market is suffering from a lack of credit-worthy buyers. An index of mortgage purchase applications during March ran at a pace 5.5% higher than seen during February, averaging 205.6 through in the four weeks ending March 29. And in a sign of a spring pick-up in activity, the first two weeks of April produced an average reading for the index of 213.8. "If lenders aren't willing to lower the bar, then things could run out of steam," he said. Underwriters now expect credit scores over 710, 720 or higher, much higher than the bar set during the housing boom of the 2000s that peaked in 2006. The economic strategist said the housing recovery remains robust and the existing home sales trajectory remains up and are near their highest level in five years. Other indications such as the amount of lumber purchases to build new homes continue to track higher. Sales of previously owned homes fell Monday to 4.92 million annual units from 4.95 million in February, according to the National Association of Realtors. Economists in a Thomson Reuters poll predicted a rise to 5.01 million annualized units.
"We would view any pullback in the housing market and housing-related equities as a buying opportunity," said John Canally, investment strategist and economist at the Boston office of LPL Financial, which is the nation's largest independent broker-dealer. "We think we're in the early innings of a fairly long housing recovery driven by fundamentals. Prices are low, interest rates are low, there's a lot of pent-up demand, so we're kind of viewing these kind of blips in in homebuilder equities as buying opportunities." Homebuilder equities, which weakened after the existing home sales report, were building steam in afternoon trading. D.R. Horton (DHI - Get Report) was up 0.73%, Beazer Homes (BZH - Get Report) was popping 2.63%, KB Home (KBH - Get Report) was rising 1.66% and PulteGroup (PHM - Get Report) was higher by 0.61%. Follow @atwtse -- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.