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Realogy lays an egg in Q1, but it's not just prices

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With a soft earnings report, home seller Realogy confirmed on Monday it is facing a slower housing market. Yet is it all because of higher prices?

Realogy reported a loss of 32 cents for the first quarter, considerably more than the loss of 19 expected.The company owns multiple brands that include Century 21, Coldwell Banker and Better Homes and Gardens Real Estatethree of the largest real estate brokerage companies out there. They also operate a significant title business and a relocation service.

For the most part, companies like Realogy make their money on commissions. The amount of those payments depend on two factors: 1) the amount of transactions originated, and 2) the price of the home, since the commission is a percentage of that amount.

In the first quarter, the average sales price was up 13 percent, but transactions were down 3 percent. What happened? The company cited difficult credit standards (which hurt transactions) and low inventory levels (which led to higher prices).

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Here's the problem: the trend is continuing into the 2nd quarter, and even getting worse. The company expects transactions to be down 5—7 percent compared to the same period last year, with sales prices up an equivalent amount. To sum it all up, the transaction volume (the combination of prices and transactions) will be in the range of negative 2 percent to up 2 percent.

"As we have moved into our spring selling season, thus far the level of open activity we expected has not materialized, particularly as it relates to homesale transaction sides," CEO Anthony Hull said.

They don't mention it, but higher rates are also likely affecting affordability.

Here's another factor: buyers want value. They are picky, and if the deal does not feel right they will walk. They will wait unless they have to move. In particular, after the real estate bubble burst in 2007, they have to completely believe they are not buying into a similar bubble.

So a moderation of home prices, while not great for a Realogy, may be exactly what the market needs right now.

--By CNBC's Bob Pisani