Cramer: Wind Now 'Out of the Sails' for Housing

The recent spike in mortgage rates is "monumental," and that will likely cool off the hot housing market, CNBC's Jim Cramer said Wednesday.

Compared to two months ago, Cramer said that the relative difference is an important factor in buying a home. "It's a third lower. I look at that number and I'm just saying 'I got to wait until it comes down.' I'm not going to buy a house this week, because it's relative," he said "Squawk on the Street."

Rates on U.S. home mortgages surged to the highest level in close to two years last week as the recent sell-off in the bond market after the Federal Reserve laid out a plan to wind-down its massive stimulus program drove borrowing rates higher.

Interest rates on fixed 30-year mortgage rates averaged 4.46 percent in the week ended June 21, up 29 basis points from the previous week, the Mortgage Bankers Association said. It was the highest level since August 2011.

(Related: Spiking Mortgages Won't Derail Housing: Economist)

"We all remember 7 percent, my first mortgage was 9 percent. There's another group of people that say 'whoa, that went too high, I got to wait until it comes down,' but maybe it doesn't."

Cramer pointed to Lennar, the home building giant, which is off it's near-term highs. "The reversal in Lennar yesterday was breathtaking," he said of the 3.71 percent decline. "I think it's daunting. I think those stocks are down for a reason. These stocks are momentum stocks. The wind has come out of the sails."

(Related: US Home Prices Jump in April, Setting Record)

Although Cramer said he believes in the idea that the U.S. has a relative shortage of available homes, this may not be enough to support the market as the dynamics are changing with rising rates. He pointed to perspective from Restoration Hardware that said the choice consumers are making is between taking a vacation or to remodeling their home, instead of buying a new one. "I think that is going to be more important than buying a new house for the moment," he said.

"Prices went up too fast," he said, after Tuesday's Case-Shiller numbers showed a jump in home prices. "I think if you're Bernanke, you say 'good' because maybe it cools off a little. It's a good thing it's happening. Let it cool off, it got too hot. It was about to become a bubble, let it cool off."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul. Reuters contributed to this report.