“We are experiencing the same as others who have reported, decent spring followed by a poor summer,” said Stephen Paul of Mid-Atlantic Builders. “Through June, sales were up 16 percent then dropped off the table in July and August.”

Home builder confidence stalled nationally in September, after rising steadily, especially at the beginning of 2013.

“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” said Rick Judson, the National Association of Home Builders’ chairman.

If interest rates retreat to where they were at the beginning of the year, mortgage refinances will likely rebound again, especially since they have dropped so dramatically in the past six months.

As for home sales, that is not an easy call. Sales have been hampered not just by rising mortgage rates, but by very low inventory, anemic construction, and still-pervasive negative equity among potential move-up buyers. Lackluster job and wage growth, especially among younger Americans, has not helped either.

(Read more: Tepper: Fed wants growth first, second, and third)

We also know that while the Federal Reserve may not be tapering now, it will have to eventually. Some say it should do so sooner rather than later.

“Rip this Band-Aid off already,” said Peter Boockvar of the Lindsey Group. “There will never be the right time to cut back, and today was the perfect opportunity to do so because the market was ready for it. Playing games now over this with the market will not smooth the eventual ease.”

Article source: http://www.cnbc.com/id/101043610

(Read more: Banks hit the brakes on mortgage operations)

The summer has not proved much better for the builders. Mortgage applications to purchase a newly built home dropped 14 percent from July, according to a new report from the Mortgage Bankers Association. Still, demand is there, and after building next to nothing during the housing crash, U.S. builders are now faced with renewing the nation’s housing stock. That, Pulte executives say, is why innovation is so important.

“When I was at my first conference, I met someone and referenced that I was doing market research,” said Ian Wild, Pulte’s director of market research. “The fellow said, ‘Let me tell you how I do market research. I get in my car and I drive down the road to the competition and I say what’s selling and why?’ And as a result of that, the innovation in the home building industry is, well, there’s very little.”

So on a hot September morning, with the roar of O’Hare’s traffic overhead, small groups of homeowners wind their way through the rows of homes in frames of back doors and out frames of front doors, gripping their clipboards and checklists, and eyeing every detail and every measure of space.

“It’s much easier than looking at a blueprint, where you keep turning it around trying to understand which way the door swings. Will this be this way?” asked Chicago-area homeowner Sasha Zingerman, motioning. “It’s much more comprehendible, and you can physically picture yourself in that space. You could see how you would orient yourself there.”

The subjects are paid to offer their opinions, and after the tours they sit down with a moderator to tell what they like, and more importantly what they do not like.

(Read more: Jobs report tempers mortgage rates)

“I like how it all flows together. It’s open, it’s airy, there’s a lot of light coming in. It seems like a happy environment,” said one woman.

Pulte gets at least five new design ideas from each of these events, which are held across the country, according to Wahl. The latest trends are full home automation (running every system in the home through a smartphone), larger mud rooms, or as Pulte calls them, Everyday Entries. Dining rooms are out, larger kids’ bathrooms are in.

“I don’t think I would ever use the formal dining room, so it would be a wasted space for a room that I don’t use often enough,” added another.

After living through the worst housing crash since the Great Depression, today’s home buyers are more skeptical and less trusting of home builders. Some blame builders for throwing up far too many houses, selling them to speculators and turning a blind eye to an overheated market that was bound to bust. They are treading back in slowly and finding higher prices.

Article source: http://www.cnbc.com/id/101029507