Yun said there is enough momentum in the market despite higher rates. "Affordability conditions remain favorable in most of the country, and we're still dealing with a large pent-up demand," he said. "However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market."

First-time buyers accounted for 29% of the purchases in June, up from 28% in May, but below 32% a year earlier. Historically, first-time home buyers have accounted for about 40% of the purchases. Extraordinarily tight credit conditions have kept buyers out of the market.

All-cash sales made up 31% of transactions in June, down from 33% in May, but up from 29% in June 2012. Investor purchases are slowly declining as the number of distressed transactions decline.

Distressed homes - foreclosures and short sales - were 15% of June sales, down from 18% in May, and are the lowest share since monthly tracking began in October 2008, the report said.

A separate survey by Campbell/Inside Mortgage Finance Monday found that current homeowners now account for a greater share of the purchases. Here's more from their press release.

"Current homeowners were the only group that saw its share of home purchases rise last month - from 43.8 percent in May to 44.6 percent in June based a three-month moving average. First-time homebuyers witnessed a slight drop in market share, going from 36.0 to 35.7 percent during the same one-month period. But the bigger story was the continuing slide in investor participation in the housing market. In June, the investor share of home purchase transactions fell to 19.7 percent, HousingPulse results show. That was down from a 23.1 percent share found as recently as February and the lowest level recorded since September of 2012."

-- Written by Shanthi Bharatwaj New York.

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