It hasn't been a good week for the housing market.
Sales of previously owned homes fell 5.1% in January -- the fifth drop in the past six months -- to a seasonally adjusted annual rate of 4.62 million, the lowest level in a year and a half.
New home construction fell 16% in January compared to December -- the biggest percentage drop in almost three years -- and permits slipped by more than 5%.
Homebuilders reported a 10-point decline in their confidence index for February to 46 -- below the key 50-point level which separates a growing market from a weakening one.
And mortgage applications fell 4.1% in the latest reporting week, reflecting declines in applications to buy and to refinance.
David Stevens, chief executive of the Mortgage Bankers Association, says he's surprised by the recent housing data. He says he'll wait for more data to see if there's a longer-term trend.
Currently, the MBA expects home sales will rise a little more than 5% this year but Stevens admits even that forecast may be too high since loan applications are falling.
"We're really focused...on the spring market," he says. "That's where you should see if there's going to be the kind of recovery path that we're expecting...There are a variety of elements to the slowness. We need to see those level out."
There are also reasons to be positive about the housing market, says Stevens. Home prices are still relatively low, interest rates remain near historic lows and the job market is improving. But offsetting those variables is a growing amount of student debt.
"Overall debt is falling but student loan debt is increasing year-over-year" and at a much faster rate than other debt, says Streven.
The New York Fed reported this week that student loan debt in the fourth quarter of 2013 rose more than 5% above the previous quarter, while mortgage, auto and credit card debt each increased 2% or less. At the end of the fourth quarter, student loan debt totaled almost $1.08 trillion -- well above $683 billion in credit card debt.
Related: College Student Debt Soars; College Presidents' Pay Skyrockets
The student debt burden coupled with relatively low salaries and credit scores will affect the ability of young people to qualify for a buy a home, says Stevens.
"They're already on the margin for being able to qualify for a mortgage," he explains. "If you add on a large student loan debt payment of $400, $500 or $600 [a month] that's going to impact your qualifying ability to buy a home."
And the data is already reflecting that. "First time homebuyers are usually 40%-45% of the mortgage market...Today they're close to 35% and we think that's directly correlated to student loan debt," Stevens adds.
Watch the video above to learn more about the impact of rising student loan debt on the housing market.
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