“Mortgage rates have increased more than 100 basis points since early May, and we anticipate that trend to continue, albeit gradually, during the next year,” Doug Duncan, Fannie Mae’s chief economist, said in a report Tuesday. He also expects economic growth to slow from the, “surprising” pace seen last quarter.

Regionally, home builder confidence increased the most in the Midwest and West and more moderately in the Northeast and South. Housing starts and building permit numbers for August will be released by the Commerce Department on Wednesday.

(Read more: Map: Tracking the recovery)

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC.

Article source: http://www.cnbc.com/id/101040159

Confidence, or lack thereof, is also still keeping some sellers sidelined.

“There always is a tendency to time the market, which we know is becoming a little bit harder to do,” said Budge Huskey, CEO of Coldwell Banker in an interview on CNBC. “It’s an assessment of their overall impressions of the economy. I think there’s still a little hesitation. People want to see stronger economic growth, people want to see more progress made toward unemployment rates and just feel better about moving on.”

Lack of inventory means it is a seller’s market, despite so much hesitance by potential sellers themselves. That will keep home prices strong, unless and until more people decide to list their homes and home builders ramp up production, which they have been so far slow to do.

(Read more: $1 million summer homes)

It begs the question, what is housing worth today, market-to-market? A million dollars may buy a McMansion in Oklahoma, but barely buy a bedroom in Manhattan.

In an effort to gauge differing values, CNBC is trawling the million-dollar market again, this time in a “back-to-school” edition.

Starting on “Squawk Box” this Friday, two reporters will show two homes without disclosing their locations; they will document the interiors, exteriors, marketed features and one unique bonus offered by each home.

Real estate maven Dolly Lenz will decide which house gives buyers a better bang for the buck.

We will then reveal where the two houses are located, and with that added to the mix, Lenz will choose a winner. That house will then go up against the next mystery location on the next show.

(Follow along on Twitter with the hashtag #MillionDollarHome and see the early winners here as well).

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/101009330

While prices continue to improve, there are still headwinds, specifically a relatively weak employment picture and a tight mortgage market. Existing home sales are also recovering far faster than new home sales, and much of the gains in new home construction is in multi-family apartments, as single family housing starts lag.

(Read More: Record High New Home Prices to Grow)

“Housing is making a positive impact on the economy, if one goes through the GDP numbers, residential construction is adding to economic growth,” said Blitzer. “But when you look at this, buying and selling existing homes, is recognized, we all feel good, the prices are going up, it doesn’t add anything to GDP.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100769361

Last week the CEO’s of 18 home building companies, who collectively build 30 percent of the nation’s new homes, sent a letter to President Barack Obama and House Speaker John Boehner urging them to avoid the fiscal cliff, even if it means raising taxes on the builders:

“We support a comprehensive agreement in Washington to avoid the fiscal cliff that includes revenue increases (including tax rate adjustments) together with meaningful entitlement reforms. We believe that a properly balanced agreement will breed confidence in the political system and the U.S. economy, will enable the housing market to continue its recovery, and, in turn, will promote broader economic growth.”

The letter was signed by the CEOs of publicly traded builders including Beazer Homes, Hovananian Enterprises, KBHome, Lennar, MDC, and Meritage.

(Read More: Best US Housing Markets for Buyers and Sellers)

Article source: http://www.cnbc.com/id/100324311

These latest numbers fly in the face of rising home builder optimism and a huge run on the stocks of the public builders. Some analysts, however, have been warning that this recovery is fragile at best, given other factors in the economy, specifically lackluster job growth and poor consumer sentiment.

“Builder stocks have continued to outperform the market as demand has remained strong into summer; also, earnings and the next few macro data points should be positive,” wrote analysts at Deutsche Bank earlier this week. “However, we think downside tail risk is mounting for 2H12. It shouldn’t take more than muddle-through economic growth for housing recovery to continue, but the risks are that even that doesn’t happen or it happens unevenly against tenuous investor optimism.”

Several home builders reported big jumps in new orders this spring, but those orders did not translate into pricing power for the market. Prices of new homes fell 3.2 percent in June after several months of gains.

Single family housing starts rose 4.7 percent in June from the previous month to a four year high, but they are still running at about one third the historical average volume. Inventories of new homes for sale rose to 144,000, representing a 4.9 month supply, but that is still historically very low.

Questions?  Comments?  And follow me on Twitter @Diana_Olick