The Mortgage Bankers Association mortgage index, which tracks mortgage applications for home purchases and refinancing, dropped 0.3% last week. Over the last four weeks, the index has fallen 7%.
Is this the start of serious trouble for the recovering housing market?
"I don't think it's in trouble," says CNBC contributor Andrew Busch, editor and publisher of The Busch Update. "But, we're definitely hitting a little bit of an air pocket here."
According to Busch, the drop in mortgage transactions is a simple case of higher prices diminishing the demand.
"Not only have the actual prices of the home gone up, but the interest rate on the lending that has gone to mortgages has gone up as well," says Busch. "Those two things have combined to decrease demand for mortgages and that's what's reflected in the mortgage index you're seeing."
Busch notes that both purchase and refinance mortgage applications have had shaky few weeks. But, higher prices are bringing some sellers to the market.
"We're seeing liquidity in more sellers coming in to provide the homes and building permits have gone up," says Busch. But, higher home prices and the lending costs have taken their toll on homes sales for the past several months. The National Association of Realtors Pending Home Sales Index has dropped every month since May and is now 8.3% off its peak from half a year ago.
(Watch: Pending home sales fall again)
"So, yes, we're in an air pocket," says Busch. "But, it's not the end of the world."
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, notes that while housing sales as of late is showing a bit of a stumble, stocks of the homebuilders are on an upswing.
Looking at a chart of the iShares U.S. Home Construction ETF (the ITB), Ross says, "We have a really interesting divergence here. In my opinion, it's a bullish divergence whereby the housing data might be somewhat tepid but the [share] prices themselves are actually quite constructive."
The ITB consists largely of homebuilders and some companies that are affected by the housing market such as lumber and furniture companies. Ross believes the ITB is hitting a critical resistance level just about now. If it breaks through, he believes it will target its highs of $26.50 from earlier this year.
"I would be a buyer of the homebuilders here," says Ross. "And, I'd buy more on any breakout."
To see Ross' charts and the rest of Busch's take on the housing market, watch the video above.
More from Talking Numbers: