Housing market hot, but there will be pullback: Redfin CEO

Hottest market is Denver & San Francisco: Redfin CEO
Hottest market is Denver & San Francisco: Redfin CEO   

The really estate market is "pretty hot" right now, but don't expect that to last once mortgage rates rise, the CEO of online real estate search and brokerage firm Redfin said Monday.

Nationwide, sales are up 10 percent and prices are up 6 percent, with some markets seeing 10 to 15 percent gains, Glenn Kelman noted.

"We've been worried about just how hot it's been," he said in an interview with CNBC's "Power Lunch" from the eMerge Americas tech conference in Miami.

"We do not see consumers willing to pay that price when rates go up. We think there is going to be a step back as the money supply tightens."

Glenn Kelman, chief executive officer of Redfin Corp.
David Paul Morris | Bloomberg | Getty Images
Glenn Kelman, chief executive officer of Redfin Corp.

Some market watchers expect the Federal Reserve to begin raising interest rates in September.

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The last time there was a mortgage rate spike, in late 2013, demand declined about 10 to 20 percent, Kelman said.

"When rates go up precipitously, when the market has a bit of a spike, that's when you really see that pullback. We don't see people saying 'well, I'll pay whatever it takes.' We see people saying, 'while rates are low I'm going to pay this price.'"

He thinks there needs to be less volatility in the housing market.

"What you want is more durable growth, not this up and down."

Pending home sales are now running at the highest levels since June 2013, and 11.1 percent above where they were a year ago, according to the National Association of Realtors.

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The hottest markets right now are San Francisco and Denver, Kelman said.

"They are both crazy. There are not enough homes for sales in Denver; everybody in California is fleeing high prices."