"Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," says Lawrence Yun, the NAR's chief economist. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."
Another factor in the uptick in home purchases is the (slightly) improving economy. "Although housing affordability conditions will become less attractive, jobs are being added to the economy and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall," Yun says. That's all manna from heaven for homeowners, who keep seeing the value of their properties appreciate. According to the NAR, the national median existing home price stood at $213,000 last month, 13.7% ahead of the pace in July 2012. Furthermore, the average U.S. home price has risen at double-digit rates for each month this year and is only 7% lower than the all-time peak of July 2006 (when it was $230,000). If that sounds like a genuine housing recovery, so be it. All homebuyers know is they better get in now. And all homeowners know is the value of their homes just keep climbing -- and who wouldn't drink to that?