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Th e M Rep o RT | 25 Feature But during housing's heyday a short eight to 10 years ago, baby boomers traded up, moving into bigger and grander homes, while Generation X jumped into hous- ing headfirst (sometimes to their own detriment). Meanwhile, mil- lennials prepared themselves to be the next Greatest Generation in the home purchasing market. So what happened? To put it simply: Times have changed, and how millennials view homeown- ership is far different from their predecessors. Fast-forward to 2014, and in many of these homes built in the "era of housing excess," no one is home. For-sale signs litter many of America's mid-market neighbor- hoods, as empty houses lose more of their appeal each day, failing to capture the attention of the coveted consumers in the under-35 age category. As housing experts tell the story, the mil- lennial generation (born roughly between 1980 and 1994) was once touted as the potential savior of housing. Setting aside those pre- dictions, the real data from today shows younger adults continue to struggle with education debt, ca- reer concerns, later starts in life, and a genuine lack of economic and employment stability. Add in the multiplier effect of the Fed gradually pulling back on years of quantitative easing—a process that is steadily pushing mortgage interest rates higher— and it's clear, the training wheels are finally coming off the new housing economy. Unfortunately, data from the first quarter of 2014 suggests what's emerging is far from golden, especially for millennials, who are already struggling with the afore- mentioned economic elements and their lack of ability to buy homes. For the first time since the housing crash, the real estate in- dustry is seeing what the market looks like without the gloss of high refinance activity, investor demand, and the most competi- tive home prices in decades. The results are not exactly inspiring. After more than five years in recovery mode, housing and its future remains a mystery—even to the Federal Reserve, which attempt- ed to usher in its own recovery through the central bank's long- term commitment to zero-interest- rate policies and the acquisition of agency mortgage securities. But in the Fed's first several months of QE tapering, housing reports show clear signs of stress. Whether these minor fissures lead to significant cracks in the foundation of housing is unclear, but early 2014 housing data pro- vides a few clues. In March alone, existing- home sales fell 7.5 percent below year-ago levels, according to the National Association of Realtors (NAR). While the slowdown in sales from February to March equated to a mere 0.2 percent drop, housing activity in March slowed down enough from 2013 levels to prompt NAR chief economist Lawrence Yun to issue a statement, saying that "there really should be stronger levels of home sales given our population." In fact, the March sales volume of 4.59 million housing units is the slowest volume recorded by NAR since July 2012. Looking at homebuilders alone, the first quarter brought both success and challenges. Beazer Homes saw first-quarter home closings fall more than 13 percent from year-ago levels, while new home orders fell 8.6 percent. At the same time, prices rose, suggesting a possible disin- centive for new buyers. At Beazer, average home prices year-over-year grew 7.5 percent in Q1. Meanwhile, the number of homes KB Home delivered in the first quarter fell from 1,485 in 2013 to 1,442 in the most recent Q1 period. Prices also went up, with the average selling price tick- ing up to $305,000, a 12-percent increase from a year earlier. With prices up and sales cool- ing, housing economists have another worry on their hands: home affordability. So What or Who Is to Blame? E conomists frequently blame the first-quarter housing slowdown on delayed sales caused by winter weather. However, a debate is already emerging on this point, challenging the status quo. "We've seen a temporary slowdown based on some severe winter weather, and we expect activity to bounce back in the spring," said Robert Denk, AVP for forecasting and analysis at the National Association of Home Builders (NAHB). Denk sees the slower Q1 hous- ing market as the outcome of uncontrollable events. Other ana- lysts see larger macroeconomic trends at work. Jeff Taylor, managing partner with mortgage tech and analysis provider Digital Risk, is not buy- ing into the theory that weather alone softened Q1 activity. Instead, he sees a sea shift in the current housing market, and for him, the change goes well beyond one-off meteorological events. "Weather is not the issue," Taylor asserted. "During the height of the snow and cold weather, housing starts (and sales) rose the most in the Northeast, suggesting weather was not a factor." "What is a factor is the lack of demand," he explained. "With the labor participation rate down, with median income in decline, and with the overall employment level 7 million behind where it should be adjusted for population growth, there is a reticence for the average person to buy a home." "Moreover, for the first-time buyer, there is an issue of weak- ened credit scores, a serious issue in today's market, where average FICO scores for Fannie/Freddie are in excess of 750," he added. Data from the Mortgage Bankers Association (MBA) seems to back up the idea of tightening credit in home financing. Credit availability edged down in April, with the MBA's Mortgage Credit Availability Index (MCAI) falling a slight 0.18 percent from an index score of 114 in March to a score of 113.8 in April. Whenever MCAI's index score ticks lower, lending standards are tightening. Just two years ago, the same index produced a much lower score of 100—indicating sig- nificantly looser credit today when compared to 2012 levels. Still, while credit access remains far improved, a subtle drop in access—combined with cooling home prices and sales—is enough to make housing analysts take note. When asked how easy it is for first-time homebuyers or the younger crowd to access credit, Denk described the process as "very difficult." Although he