More good news on the housing market, despite the rise in mortgage rates. The latest S&P/Case-Shiller home price index gained 12.4% in July vs. a year ago--its strongest showing since early 2006. But on a month-to-month-basis, prices rose at a slower pace--1.8% in the 20-city composite of the index compared to 2.2% in June.

Related: Big Drop in Housing Starts Suggests a More Shaky Recovery: BNP Economist

"Overall the housing market is steadily gaining but it does have several headwinds--higher mortgage rates and very tight inventory," says Diana Olick, real estate correspondent at CNBC. Thirty-year fixed mortgage rates are now at 4.5%, up from 3.7% a year ago.

Related: Housing Bubble Deflated by Rising Rates

While home prices are rising--along with the stock prices of homebuilders--Olick tells The Daily Ticker they haven't moved high enough for some sellers who are still underwater (homeowners who owe more on their mortgages than their houses are worth).

Related: Housing Market Won't Recover Until Unemployment Falls Below 7%: Miller Samuel CEO

Despite the headwinds, she says the future looks bright for housing--especially for homebuilders--but ultimately what happens in housing reflects what happens in the job market.

"We've seen first-time buyers fall out of this market," says Olick. "They are usually 40% of homebuyers. Now they are less than 30%. That's because of job growth and income growth. Once we see those jobs come back the demand for new homes will come back as well."

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