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Cash Sales, Driver of the Housing Recovery, Starting to Wane

This might still be a challenge. Although home prices remain low compared to historical levels, mortgage rates are on the rise, denting affordability. Mortgage underwriting standards also remain too tight.

And while rising home prices are pulling more people out of water, millions remain trapped with a underwater mortgage loans, unable to trade-up.

Still, CoreLogic is confident that traditional homebuyers will take over from cash buyers, as affordability is still very high. Home prices will have to rise 47% or interest rates will have to rise 6.75% for home affordability levels to return to those seen in 2000-2004 period, according to the report.

Core Logic remains "optimistic that rising rates and home prices will not dissuade more traditional buyer from entering the market and financing a purchase" Khater wrote.

-- Written by Shanthi Bharatwaj in New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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