“A lot of the sub-contractors are seeing an increase in business, yet they’re reluctant to hire staff or have an inability to hire skilled labor, so we’re seeing delays with framers coming onto our properties to frame the houses, we’re seeing challenges with drywall finishers and painters,” says Paul.

Many builders are also seeing supply constraints, as they did not expect to see such a surge in demand. Demand is strong in large part because there is such a small supply of existing homes for sale nationwide, and because banks have been exceedingly slow to work through foreclosures in some states.

(Read More: Home Prices See Record Gain in April)

“About one third of homes sold are completed, down pretty significantly from where we were earlier in the cycle, which was in the 50 to 60 percent range,” notes David Goldberg, an analyst at UBS.

While the major public builders have not voiced concern publicly over risks to their backlogs, the analysts that cover them say if rates continue to rise, they will not be able to ignore it.

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

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Article source: http://www.cnbc.com/id/100849156

Based on the change in mortgage rates from early May to today, the average buyer would have to pay 13 percent more in monthly payments, including taxes and insurance, according to Mark Hanson, a California-based analyst. They also have to earn 10 percent more in income to qualify for a loan based on a typical qualifying debt-to-income ratio of 45 percent.

“These are huge moves especially considering—when purchasing a house using a mortgage—most people buy based on ‘monthly payment and the maximum allowable debt-to-income ratio.’ This means first-timer share will fall even further. They are already at a multiyear low even with record-low rates,” said Hanson.

(Read More: As Prices Rise, Banks Repossess More Homes)

First-time homebuyer participation was at just 29 percent, according to the Realtors, a five-year low. Without these buyers, as investors pull back and prices rise, home sales will likely lose steam. June’s report on pending home sales, or signed contracts in May, will tell just how much rising rates are impacting sales. That report will be released Thursday, June 27.

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

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Article source: http://www.cnbc.com/id/100831431

(Read More: Short Supply Has Home Sales ‘Squeaking’ Out Gains)

While Humphries does not make the connection to rising bank repossessions in the report, his numbers do. They show inventory easing much more on the low end of the market, where distressed homes tend to be.

“The greatest year-over-year decreases in inventory were among more expensive homes, with the availability of top-tier and middle-tier properties each falling 15.7 percent year over year. The number of bottom-tier properties for sale on Zillow nationwide fell only 2.5 percent in early June compared to June 2012.”

As more bank-owned homes hit the market, inventories are likely to turn positive again in the near future.

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

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Article source: http://www.cnbc.com/id/100812845

In the first three months of this year, there were nearly 1.4 million refinances on Fannie Mae and Freddie Mac mortgages alone, according to the Federal Housing Finance Agency. Of those, 22 percent were through HARP, which was recently extended through 2015. More than 2.4 million borrowers so far have taken advantage of that program.

For borrowers who don’t have government-backed loans and therefore don’t qualify for that program, rising home prices have helped allow more of them to qualify for refinances. Among borrowers, 850,000 rose above water on their mortgages, moving into a positive equity position in the first three months of this year, according to a new report from CoreLogic. While nearly 10 million are still underwater, the more that rise above, the more refinances can happen.

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“We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap,” said Anand Nallathambi, the CEO of CoreLogic.

Rising prices, however, are a double-edged sword, especially in a rising interest rate environment. Potential buyers are losing purchasing power every day, just as demand is surging.

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

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Article source: http://www.cnbc.com/id/100810389

“I think you’ve got to move away from a situation where when private shareholder gain and government taxpayer losses, and that is what this bill seeks to do, it really transforms how we doing housing finance hopefully we will be able to pass something that puts us on a better course than where we are,” said Sen. Corker in an interview Tuesday on CNBC.

(Read More: Big Banks Bet on Jumbo Mortgages Again)

Some analysts say the lawsuit could actually push Congress to act more quickly on winding down Fannie and Freddie.

“What we just a few days ago saw as only a remote possibility is now a 25 percent chance for action,” wrote Jaret Seiberg of Guggenheim Partners in a note to investors. “This is because we suspect this will anger many on Capitol Hill who believe Fannie and Freddie are only alive and kicking because taxpayers put $187 billion at risk. We see the suit reinforcing the view on Capitol Hill that Fannie and Freddie included too much upside for investors and too much risk for taxpayers.”

(Read More: Reverse Mortgages Backfiring on Seniors)

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

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Article source: http://www.cnbc.com/id/100806300

“People who weren’t sure about whether they were going to buy a house or not are coming back in, and that’s especially true of the affluent buyers,” said Watters. “I know at Chase at least we’ve also put a lot of emphasis on making sure we’re doing what’s best for those affluent buyers, including adding more bankers and working with our chase private client customers to really focus on opportunities in the jumbo space.”

(Read More: Rising Rates Turn Investors From REITs)

Watters admited that investors are still slow to return, as the private label market tries to figure out what securitization standards should be. The complete lack of standards during the housing boom, when securities were issued with bits and pieces of loans and wide ranges of risk, led to the downfall of both the mortgage and the housing markets.

“We are not slicing and dicing any loans. We’re selling loans as whole loan products,” assured Watters. “These are well-underwritten loans, great documentation, great borrowers with strong fico scores, large down payments, so these are great credit products, great investment for people who are looking to get additional yield.”

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

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Article source: http://www.cnbc.com/id/100802833

(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

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Article source: http://www.cnbc.com/id/100772471

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

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

(Read More: Homes Selling at Fastest Pace Since Boom)

“It has the look of a runaway housing boom again,” said Jane Fairweather, a Realtor in Maryland, who added that looks can be deceiving. “What you have is very inexpensive money and you have very few houses for sale. As soon as interest rates go up, I think you’ll see a lot of people back off.”

Interest rates have been moving steadily higher. After Wednesday’s speech by Federal Reserve Chairman Ben Bernanke, rates took another jump of 0.375 percentage points.

“It’s an over-correction, but a painful one for buyers,” said Dan Green of Waterstone Mortgage. “A home buyer has five percent less home purchasing power as compared to 24 hours ago.

In the end, sales will come down to buyer confidence, affordability and mortgage rates. Even if that last one moves higher, rates are still historically low and confidence is gaining steam despite the rising prices.

“This week I had a seller who got a full price offer in about four days and he refused to take it because he wanted multiple contracts, come on!” exclaimed Fairweather.

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

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Article source: http://www.cnbc.com/id/100761763

(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