The housing market presents a mixed bag: prices are on a slow rise, and though homes are still affordable, inventory continues to be anemic.

The National Association of Realtors (NAR) reports total existing home sales showed slight positive increases in January, rising 0.4%, while at the same time, median existing home prices rose 8.2%. Inventory is increasing in small increments, rising 3.4% in January but remains 2.2% lower than the same time last year.

Bottomline: current homeowners wanting to buy another existing home or newly built home are delaying their purchase due to limited selection. Homebuyers are also met with rising prices, albeit not as high as they were during the height of the market but still on the move.

Are Mortgage Rates a Factor?

Ralph McLaughlin, Trulia’s chief economist, says he doesn’t see the upward inching up of rates rate as playing a critical part for current homebuyers, because rates have not reached game-changing heights seen in the mid-to late 1990s. “Some reasons why rates don’t come into play that much is because the Fed’s rate is not closely tied to mortgage rates," he said. "Fed rates apply to more short term debt like credit cards or auto loans. Plus, in some markets of the country, the mortgage average rate would have to be 7% to 10% for the cost of buying to equate the cost of renting. It’s still overwhelmingly cheaper to buy than rent.”

“Mortgage rates have hovered around 4% for quite some time now,” points out Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Fla. and president of NAR. “This has kept affordability in check at a time when home prices continue to rise. Mortgage rates can edge closer to 5% without deterring too many would-be buyers. However, home price growth needs to decelerate a little to preserve affordability in a rising rate environment. The best way for this to occur is to have more supply – specifically new home construction.”

Is it a Buyer’s or a Seller’s Market?

Another common discussion is whether the current housing market favors buyers or sellers. “It’s both a buyer’s and a seller’s market,” McLaughlin says. “Sellers benefit, because prices have steadily increased over the last three to four years, allowing them to come out of the sale financially ahead. Also, inventory is down about 35% from the last four years, which is why prices have increased.”

On the flipside, buyers are not at a total disadvantage, McLaughlin asserts. “Even though prices have increased and inventory is down, if a potential homebuyer can stay in home for five years, it is still cheaper to buy a home than rent," he says. "So it’s still not a bad time for homebuyers to look to purchase. We think a combination of increasing prices and lower inventory will also entice more homeowners to consider putting their home on the market too, which may add more inventory.”

Salomone is seeing advantages for sellers. “Accelerating home prices amidst stagnant wage growth has certainly priced out some buyers, especially first time buyers in high cost areas,” he says. “It also doesn't help that rising rents and student debt make it more difficult to save for a down payment. The lack of inventory and continuing price growth in various metro areas have made buying an affordable home particularly burdensome for many first time buyers and middle class families.”

“Nationwide, we are seeing growth and recovery,” Salomone adds. “Still, that growth is slower in some areas. For example, the Midwest and New England have been slower to recover because of the loss of manufacturing jobs and stagnant wages.”

What’s a First Time Homebuyer to Do?

If you are renting, consider asking your landlord if he is willing to sell the property to you. “It’s worth a shot, and I know a few people who have successfully purchased their home this way,” McLaughlin says. “Also, if buying your rental isn’t a factor, keep in mind that with inventory being down mainly for starter and trade-up homes...buyers should have their ducks in a row with financing and have full documentation ready before you make offers and look for a house.”

McLaughlin adds that financing can also be a roadblock for many first time homebuyers. “We always advise buyers to put down at least 20%, but a variety of programs exist that allow the buyer to put down less without having to get mortgage insurance,” he says.

Salomone says first-time buyers are competing with people who have a little more money in this tight inventory market, so it's important to stay on top of what's available in your market and be ready to act quickly once you find that dream home.

“The best way to find your dream home is to work with a Realtor to help navigate the process--you don't have to wait until you've already found a home you want,” he advises. “Start with finding the partner that will help you find homes that fit your requirements, who knows the neighborhood and area, and who can set you up to move quickly once you find the right property.”

Realtors like Marie Bowe, senior broker at Owners.com, offers creative tactics like writing a personal letter to the homeowner -- a gesture that could put you ahead of the pack.

“If you’re interested in a few specific neighborhoods, getting personal is a smart tactic,” she says. “I’ve advised clients to write personal letters with offers included and mail them to the owners of their dream homes. You never know who is planning on selling, and your letter might be just the push they need to work out a deal with you.”

Bowe also suggests doing some legwork to find the ideal property. “If a property you like is undergoing a facelift or renovation, you might be looking at a fix and flip," Bowe says. "Leave a note in the mailbox, or chat with a friendly crew member. If you get there first, the owners will be motivated to work with you to get their project sold.”

Steve Udelson, president of online real estate auction house Hubzu, adds that auctions are a great place to score an affordable home. “Many people may not realize that bank-owned properties sold at auction can offer great value and potentially overlooked opportunity,” he says. “Many of these properties can be in good condition or have great potential as fixer uppers.”

More from Stocks

GE Investors Lose Their Minds Over an Analyst 'Upgrade'

GE Investors Lose Their Minds Over an Analyst 'Upgrade'

Dow Rises but Stocks Turn Mixed as Wall Street Monitors U.S.-China Trade Talks

Dow Rises but Stocks Turn Mixed as Wall Street Monitors U.S.-China Trade Talks

GE: A Bottom Is Not a Point In Time but a Process

GE: A Bottom Is Not a Point In Time but a Process

Apple Rises Despite Price Target Cut by Piper Jaffray

Apple Rises Despite Price Target Cut by Piper Jaffray

Under Armour Is Pierced a Second Day on Soft North American Sales Guidance

Under Armour Is Pierced a Second Day on Soft North American Sales Guidance