Here's why housing prices have been going up

Potential homebuyers are seeing higher prices but fewer homes on the market.

According to data from the National Association of Realtors, the median price for an existing single-family home went from $171,100 to $188,900 from January 2013 to January 2014 – a 10.4% increase in just one year. Over the same period of time, mortgage rates jumped from 3.47% to 4.54%.

The combination of higher home prices and higher mortgage rates bit into transactions. The amount of homes under contract has fallen eight straight months and is now 10.5% lower than it was last year. And, purchase applications are also down 17% from last year as well.

(Read: Home sales fall for 8th-straight month in February)

CNBC contributor Gina Sanchez, founder of Chantico Global, believes higher prices had to do with lower quantities, not higher demand.

"Home price rose because there really was some tightness in inventory levels," Sanchez. "As home prices rose, particularly in the lower-end, new housing starts, new home sales, and existing home sales really suffered."

The supply story may change later this year as Sanchez expects to see more homes hit the market.

"That could actually decrease prices which would be good for the average home buyer," says Sanchez, "But, that's actually not going to be good for the overall housing story. I think that we're still going to look at a challenged home-selling environment for a little while."

(Read: Housing in recovery, but not its stocks)

However, Mark Newton, Chief Technical Analyst at Greywolf Execution Partners, thinks there's at least one potential opportunity for investors ahead. Newton believes there are bullish indicators in the chart of the iShares U.S. Home Construction ETF (the ITB).

"We've seen about an 11.5% decline in the ITB in the last month or so," says Newton. "It's gotten oversold and we're down to a pretty good risk/reward area with regards to how we see the technical structure. It's very attractive to take a look at buying homebuilders at this stage."

Newton sees supporting uptrend line that has been in place for half a year. That, combined with the Federal Reserve Bank's interest rate policy, will help homebuilder stocks ahead, according to Newton.

"The Fed has basically said that interest rates are going to remain low for a longer than expected period," says Newton. "We've seen a dramatic flattening in the yield curve. Most of those are set up to be bullish for homebuilders. So, I expect this to be something that's fairly attractive going forward."

To see the full discussion on housing and homebuilders with Sanchez on the fundamentals and Newton on the technicals, watch the video above.

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