The good news, said Freddie Mac chief economist Frank Nothaft at the National Association of Home Builders Fall Construction Forecast, is that employed people with good credit and enough money squirreled away to make a down payment can still get mortgage loans to buy houses.

The bad news, according to Nothaft, is that those are the only people who can get loans, and they can only get certain kinds of loans (traditional 30-year, fixed-rate mortgages), and that while mortgage rates are still well below historical norms, they have inched up since the boom.

And even these prime loans, as credit conditions remain bleak, are getting tougher to acquire, Nothaft said.

Jumbo loans, traditionally loans for more than $417,000, are also more difficult to secure because banks are charging higher interest rates on them. During the peak of the housing boom in December 2005, 33% of all prime loans were jumbos. In March 2008, jumbos had fallen to just 8% of all prime loans, Nothaft said.

So-called "alternative" mortgage products that helped fuel the housing boom by allowing people to buy homes without proving their incomes, making down payments, or having good (or any) credit, have all but evaporated from the banking landscape, Nothaft said. Subprime and Alt-A loans, two of the chief alternative loan offerings, accounted for $1 trillion of the $3 trillion in single-family mortgage originations in 2006. In the first half of 2008, out of an annualized level of $1.8 trillion in mortgage originations, just $0.1 trillion were subprime or Alt-A.

Default rates for adjustable-rate subprime mortgages have reached 26.77%. Subprime fixed-rate mortgages have a default rate of 9.60%, while prime fixed-rate mortgages have only a 1.30% default rate.

Banks have been responding to rising default rates for two years, tightening credit on prime loans, "each quarter for the last two years," Nothaft said.

Though prime borrowers are the least risky mortgage borrowers, banks are so afraid of declining home prices that they have been increasingly conservative, knowing that the moment they agree to a loan based on an appraised value, the value of that home will fall further, potentially to below the amount of the loan, said Fannie Mae chief economist Doug Duncan.

Banks also are nervous because of the over-supply of for-sale housing. While the total amount of home inventory has decreased in the last year, homes are selling at slower and slower rates, meaning the calculated month's supply of new homes has actually gone up, though the total number of homes for-sale has gone down, Duncan said.

And tight credit is not going to dissipate any time soon. Banks are only about half-way through their period of credit conservatism, Duncan said.

"We have a ways to go here," Duncan said Wednesday. "Credit conditions won't ease terribly much through 2009," Duncan said.

Ethan Butterfield is a senior editor, business, for BUILDER magazine.