The Federal Reserve policy makers' decision to keep the interest rates hovering around 'zero' in a bid to revive the housing market has yet to make an impact as the Mortgage Bankers Association reported a decline in applications for home loans. All this is despite the lowest mortgage rates in more than three months.

Although the economy continues to strengthen, the housing market has yet to show any signs of joining in the optimism. High unemployment and underemployment teamed with severe weather and caution amongst the population has continued to erode the demand. The lowered lending costs have not managed to rectify the situation, with applications for refinancing loans rising by a bare minimum to 67.3% from 67.2%. Tax extension to first time buyers has yet to push demand.

The Fed, which expects recovery in this sector to be sluggish at best, continues to make efforts to pull the country out of its three year housing slump.

"People are holding back, we're in a flattish market", states Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts. "Once the economy gets more momentum, particularly once you get jobs created, then this market could pick up".