The economy's gradually getting on track, and that has resulted in interest rates inching higher. Naturally, the higher the rate, the less bang potential homebuyers get for their bucks.
There's little reason to expect this trend to reverse. The Fed recently announced that it's ready to begin tapering its rate-suppression plan by reducing its bond purchases by $10 billion a month. Easing up on this latest round of quantitative easing -- QE3 -- will have an impact on interest rates. After all, if the Fed's $85 billion in monthly bond purchases created the illusion of demand, what will the reduction do to the real demand?
The National Association of Realtors has reported three consecutive months of declines in existing home sales.
Housing bulls will argue that the market is still strong. The association representing real estate professionals still expects 5.1 million homes to be ultimately sold in 2013, and that's the highest tally since 2007. Is that worth bragging about? Is it merely a coincidence that 2007 was when the last housing bubble popped?
Either way, the last several months have not been kind, and that's enough to kill any of the favorable momentum the market experienced earlier in the year when rates were bottoming out.
3. The Mortgage Market is Starting to Dry Up
With homes getting more expensive and interest rates getting higher, you might expect interest in buying to dry up, and that's exactly what's been happening.
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