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But mortgage rates have climbed more than a full percentage point since May. The increase has already slowed sales of new homes in July. And economists expect it could drag re-sales lower in August. Mortgage rates began to rise after Federal Reserve Chairman Ben Bernanke first signaled that the Fed might reduce its bond purchases later this year. The purchases have helped keep borrowing costs low. Economists said the index likely captured only part of the recent increase in mortgage rates, some of which occurred after June. Other factors may be slowing price gains. Investors made up only 16 percent of buyers in July, down from 22 percent a year earlier. That reduces competition for purchases. And foreclosed homes, which usually sell for fire-sale prices, are also making up a smaller proportion of sales. A slowdown from the strong price gains in recent months isn't necessarily a bad thing, said Stan Humphries, chief economist at real estate data provider Zillow. It may keep home prices from becoming unaffordable. "This ongoing stabilization ... is happening, and it's not the end of the world for the housing market," Humphries said. Rising prices have several economic benefits. They make homeowners feel wealthier and more likely to spend. And they encourage more Americans to sell homes, which boosts the supply of available homes, leading to more sales.
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