“Tepid.”

That’s been one description of the home purchase market this spring. Applications to purchase a home were off slightly for the week — but still a little better than this time last year. Pending home sales were down also, just about as much as mortgage applications to purchase a home, which makes sense.

Given that rates are lower than they have been in about a year and a half and credit availability is good for anyone that is a position to buy a home, the perceived lack of sales is is really about inventory. Or at least inventory most potential homebuyers can afford.

To call the market “tepid” is a gross generalization.

Homes are still selling at a healthy pace on the lower end of the market. They are actually selling fairly well. Right now there are more than a sufficient number of homebuyers that can afford those lower end homes — they are just getting less of a home for the money than they would have gotten three or four years ago. There is also sufficient inventory for the number of buyers that can afford to purchase that inventory and price increases are relatively close to increases in income. In the housing and mortgage markets, your biggest group of homebuyers is always at the lower end. The higher the home price, the fewer potential buyers. In “theory” it seems like a sustainable market. It would be nice to think that we might be finding a new normal for the housing market.

Business theory, though, seldom applies “well” when considering basic human needs like housing. It’s also more complicated because in the housing market many consumers are also the suppliers. Many need to list and sell a home, do well in the process, and then buy well in the future for the transaction to happen. That may work for the short term as there is a softening in prices of higher end homes in the market.

It’s possible right now to make a great deal selling a lower end home and get a pretty good deal on something a little more expensive. That doesn’t bode well for a sustainable market, though. There is really nowhere for mortgage rates to go to make higher end homes that much more affordable to a larger number of consumers. If increasing the number of home sales is the end goal, someone needs to bring more low end inventory to the market.