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Housing: Should you stay or should you go?

Adam Jeffery | CNBC

If you listed a home for sale in the last few months, you may have been pleasantly surprised.

Demand has been robust, and stories abound of houses selling for well above their asking price. In states like Florida that were especially hard hit by the housing collapse, prices in some markets are up double digits from a year earlier.

(Read more: Real estate recovery watch map)

And when mortgage rates began their sharp rise several weeks ago, demand initially rose as buyers—apparently worried about locking in rates before they moved higher—rushed to sign deals.

(Read more: Buyers ignore surging rates, send mortgage apps higher)

But logic suggests that that particular party can't last. In fact, mortgage applications slipped for the week ended July 12, the Mortgage Bankers Association said.

(Read more: US mortgage applications slip anew)

Meanwhile, a recent survey by Trulia found a of consumers said they would be discouraged from buying a home if interest rates rose above 5 percent.

All of which raises some tough questions for many homeowners: Should you rush to sell your house now, even as the summer doldrums approach? Or with the economy and the job market apparently on the mend, is it better to wait for the moderate pickup in activity that usually surfaces in the fall?

It depends partly on what kind of home you're selling.

If you have a house that would appeal to a family, it makes much more sense to act now, says Lawrence Yun, the National Association of Realtors' chief economist. "If someone has a large house that would be a good fit for a family with kids, they would have a harder time in the fall months," he said. "Even though some say there's a second revival, it's not as strong as the spring."

Even if you're not selling a potential family home, Yun says waiting may be risky. "Even if there are slightly more people with jobs, from the seller's strategic point of view, I think they will see more potential buyers at a lower interest rate."

There is also the matter of inventories. The number of homes on the market in June was about 7 percent below the level a year earlier, according to Realtor.com. In some markets, it is almost impossible to find a home in certain price ranges.

But the overall supply of homes for sale has been building, and home builders are gaining confidence, both of which suggest more competition awaits potential sellers.

(Read more: Home builder confidence soars)

Still, even with these clouds on the horizon, experts like Frank Nothaft, chief economist at Freddie Mac, says sellers don't need to panic.

The market is strong right now, he said, but "I don't mean to say it's going to be bad in a couple of months." While buyers may be experiencing some sticker shock from the rapid rise in mortgage rates, he does not expect much more in the way of rate hikes. In any case, he added, in most markets, homes tend to still be "very affordable" at a 4.5 percent mortgage rate.

Nothaft is equally unruffled by rising inventories, pointing out that they remain well below 2003-2006 levels.

So should you stay or should you go? As with most financial decisions, a lot depends on your personal circumstances. The real estate market is in a sweet spot right now—but you may still be able to catch it even if you squeeze in a few days at the beach.

_ by CNBC's Kelley Holland

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