Subprime and near-prime mortgage originations rose sharply in 2004 and 2005 and likely accounted for a large share of the increase in the number of home sales over that period. However, originations of nonprime mortgages to purchase homes appear to have peaked in late 2005 and declined substantially since then, and by more (even in absolute terms) than prime mortgage originations.
Thus, some part of the effect on housing demand of the retrenchment in the subprime market has likely already been felt. Moreover, indicators such as the gross issuance of new subprime and nearprime MBS suggest that the supply of nonprime mortgage credit, though reduced, has by no means evaporated.