Home prices were up over 12 percent in the nation’s top 20 housing markets in July, according to a report this week from SP/Case-Shiller. While the price gains are moderating, the jumps make it increasingly difficult for first-time home buyers to get into the housing market.

(Read more: Forget easing prices, new homes are up, up, up)

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“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.

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“This coming week, market participants will be focused on Friday’s jobs report as an indicator of whether the economic recovery is strong enough to withstand an earlier-than-expected withdrawal of Fed stimulus.”

Mortgage rates are up about a full percentage point from where they were at the beginning of May. That translates into about a 15 percent jump in monthly payments for the average home buyer, or 15 percent less purchasing power, depending on how you look at it. That can certainly be make or break for some buyers, especially first-time home buyers who may have been stretching in the first place.

“Applications for new home purchases have continued to move sideways over the last month, but that may be people are rushing to buy or lock in mortgage rates before rates move even higher,” said Michelle Girard of RBS Securities. “It may be that there is going to a bit of a lag effect. I still think rates are historically low, and we are in an improving economy, although a gradual one, the recovery can continue, maybe the pace will moderate—but I do not think the back up in mortgage rates is going to derail the housing recovery.”

Article source: http://www.cnbc.com/id/100862969

“This coming week, market participants will be focused on Friday’s jobs report as an indicator of whether the economic recovery is strong enough to withstand an earlier-than-expected withdrawal of Fed stimulus.”

Mortgage rates are up about a full percentage point from where they were at the beginning of May. That translates into about a 15 percent jump in monthly payments for the average home buyer, or 15 percent less purchasing power, depending on how you look at it. That can certainly be make or break for some buyers, especially first-time home buyers who may have been stretching in the first place.

“Applications for new home purchases have continued to move sideways over the last month, but that may be people are rushing to buy or lock in mortgage rates before rates move even higher,” said Michelle Girard of RBS Securities. “It may be that there is going to a bit of a lag effect. I still think rates are historically low, and we are in an improving economy, although a gradual one, the recovery can continue, maybe the pace will moderate—but I do not think the back up in mortgage rates is going to derail the housing recovery.”

Article source: http://www.cnbc.com/id/100862969

(Read More: Home Price Gains Go to Double Digits)

First-time home buyers will be hit hardest by rising rates, just as they were beginning to trickle back into the market. They made up just 29 percent of buyers in April, according to the National Association of Realtors, the lowest level in two years. Historically, they usually account for about 40 percent of the market.

The 30-year fixed mortgage hit a record low rate of 3.47 percent in December of last year. Even though it is still well below historical norms, this small rise is already taking its toll.

“In my world it’s clearly slowing the market and pricing. Right now I have properties that are well-priced yet sitting on the market unsold,” said David Fogg, a real estate agent in Burbank, CA. “Should rates continue to rise, values will likely soften.”

(Read More: Borrowers Becoming Accidental Landlords)

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

Questions? Comments? RealtyCheck@cnbc.com

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(Read More: US Home Sales Rise to Highest Level in More Than 3 Years)

First time home buyers are already dropping out of the market, representing just twenty-nine percent of home buyers in April, according to the NAR—the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly twenty-five percent from a year ago, according to a new report from Lender Processing Services.

Just eighteen percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to thirty-five percent about a year and a half ago. Sales of homes priced below $100,000 were down ten percent in April compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations.

(Read More: Mortgage Applications Sink as Interest Rates Jump)

“I don’t see it lasting,” added Fairweather. “I think the minute they increase interest rates, you’ll see people pull back.”

—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/100758136

“I think for the short term the people who have the cash will have the advantage. Over the longer haul, I think it will even out. I think the recovery is uneven,” says Howard.

(Read More: Is Multi-Family HomeConstruction Overheating?)

The first builder to report Monday is Virginia-based NVR, with Ryland, Pulte and D.R. Horton continuing through the week. Analysts say Texas-based D.R. Horton, whose stock has recently outperformed its peers, is the one to watch, a bell weather for the group.

“They are the largest builder in terms of the number of closings, and they are in the most markets, so they will probably be able to tell us not only about orders, but also about other things that are important to folks now, like what are material prices doing, how are you negotiating with suppliers,” notes Megan McGrath, an analyst at MKM Partners.

Most of the big builders have seen dramatic growth in new orders, as first time home buyers slowly come back to the market. These buyers are facing stiff competition from all-cash investors in the existing home market, and are therefore looking to new builds. D.R. Horton is an entry-level builder, but has been able to shift product to move-up buyers when the demand is there. Move-up buyers have been moving out of the market of late, despite the overall housing recovery and rising values.

“I think the recovery we’re seeing right now is first-time buyer and the very high end of the market. The move-up buyer has not really shown up as of yet, and if you want to see a very strong recovery in housing we need to see the move-up buyer playing a more prominent role than they are today,” says Richard Smith, Chairman and CEO of Realogy Holdings Corp.

Monthly readings on new and existing home sales are also out next week and will offer more insights into the current strengths and weaknesses of the housing recovery in this crucial Spring season.

(Read More: What’s Holding Up City Home Prices? Boomers)

“In a worst-case scenario, confidence could weaken further and housing starts could mark time,” says Paul Diggle of Capital Economics. “But by far and away the most likely outcome is that the construction industry’s growing pains are overcome and homebuilders break ground on many more sites over the next few years.”

Article source: http://www.cnbc.com/id/100656470

Their story is getting ever more common, as total student loan balances nearly tripled between 2004 and 2012, according to a new survey from the Federal Reserve Bank of New York. Now $1 trillion in collective student loan debt is directly affecting the housing recovery.

“Short term, you see a decrease in the number of first-time home buyers,” said Brian Coester of Coester Valuation Management. “You’re going to see somebody who would have been able to afford a more expensive house maybe go for the lower version or the downgraded version.”

First-time home buyers usually make up over 40 percent of the home buying population, but their share has hovered at or below 30 percent during this recovery, according to the National Association of Realtors. The student debt burden has kept many potential buyers out of the market, either forced to rent or to move back in with their parents, like Sophia Chaale.

“Without the student loan debt, a year and a half, two years earlier would have been the time I could have afforded to buy a house, and probably something a little bit bigger,” Chaale said.

(Read More: Surging Student-Loan Debt Is Crushing the System

Chaale is facing $60,000 in student loans from graduate and undergraduate schools. She is paying $320 a month on a 30-year loan. Only after living at home for two years was she able to apply for a mortgage and put a down payment on a home. She is scheduled to close at the end of April.

“I consider myself lucky that I had a place where I could save, but what about other people who aren’t originally from this area, who have to pay an extra $1500 a month in rent, and that rent money is not going to savings. How are they going to be able to save up or even to make that transition from renting to owning, in addition to all the student loan debt?” Chaale wondered.

Article source: http://www.cnbc.com/id/100624148

“Rapid price appreciation is not good news for home buyers,” said Lawrence Yun, chief economist for the NAR. “Wages are up just 2-3 percent, while prices are rising 4-5 times that.”

(Read More: Home Resales Hit 3-Year High but Miss Forecasts)

With the increase in supplies came a return of all-cash investors, who had been moving out of the market, causing sales of homes on the low end to plummet. Investors made up 22 percent of home buyers in February, according to the Realtors, up from 19 percent in January. All-cash sales hit 32 percent, up from 28 percent, and distressed home sales also increased to 25 percent of all sales, from 23 percent.

Low inventory has kept first-time home buyers, who largely seek lower-priced homes, out of the market. Newlyweds Brian and Ali Earle have been looking for a home in Northern Virginia for almost a year.

“There’s not a lot out there,” Brian said. “It’s actually amazing. We see houses go under contract in a day or two, and so we really have to be on top of the game and be willing to drop everything and run and go check out a house, or it’ll be gone.”

Article source: http://www.cnbc.com/id/100577800

(Read More: Could Rentals Be the New Red Flags in Real Estate?)

Housing inventory usually drops in the winter months, only to rebound in the spring, but this winter has seen a larger than normal decline. Realtors are looking for more homes to come on the market in the spring, but there are still 10.7 million borrowers who owe more on their mortgages than their homes are worth, and an additional 2.3 million who have less than five percent equity in their homes, according to CoreLogic. Those homeowners cannot sell without having to pay into their mortgages, so they are largely stuck in place. First-time home buyers are purchasing at an unusually low rate due to tighter credit standards, and many potential sellers simply don’t want to list until prices rise more substantially.

(Read More: Soaring Housing Stocks in Perspective)

“We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing,” notes Yun. “Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast.”

(Read More: Home Builders Turn to Rental Apartments)

Article source: http://www.cnbc.com/id/100412357