diana olick has the story. >> reporter: solar panel, tankless hot water heaters and extra insulation can save homeowners hundreds of dollars a month there is a bill to have lenders factor the savings in when figuring a mortgage. >> it's about energy efficiency, savings, i think it's a win, win proposition for the industry. >> reporter: the bipartisan save act does two things, requires lenders to factor energy savings into how much a borrower can afford into the mortgage payment and subjecting the savings in the energy bill from the monthly expenses and tells lenders to add the value of expected energy savings to the value of the home in the appraisal. since mortgage amounts are based on a percentage of the value of the home, this would allow borrowers to get a bigger mortgage. that's where homeowners likely ons who already have green technology will be able to make more money when they sell. the value of green will be in the appraisal. >> a lot of my neighbors feel that it's too much of a initial investment and they don't want to put that money down, but if they see that it's going t

for "nightly business report," i'm diana olick in washington. >>> for more on rising impact rates, log on to our website nbr.com. >>> a big set back for apple today. a federal judge in new york ruled that apple conspired to raise the prices of e books. she came down hard on apple saying the company not only colluded with five major publishing houses to take on the lock on electronic book sales but master minded the strategy. according to the ruling, apple encouraged publishers to jack up prices 50% or more overnight to break the $9.99 book prices. apple insists it did nothing wrong and will appeal the ruling. >>> apple is facing a ban of top-selling bad ggadgets on aug 5th. they are asking the trade commission to lift the band pending the appeal of another case thecently lost. last month they halted the sales of iphone 4 and ipad 23 g in a ruling apple infringed on a patent owned by rival samsung electronics with technology on those two devices. >>> the tribune company wants to split into two. it plans to separate the newspaper publishing businesses that includes big dailies like the l

as diana olick reports, there are new worries about a housing bubble. the nation's home builders are more confident than they have been in seven years. supplies for existing homes for sale are near record lows and reporting bids wars at home houses. home prices are up over 12% from where they were a year ago. sounds like the perfect recipe for another housing bubble or is it? >> no, we're not in another housing bubble. there is plenty of room to grow before irrational levels. >> reporter: still near record high afortbility. home prices are up but well off the peaks of the housing bubble. mortgage rates are higher but historically low. he says prices would have to rise an additional 45% or rates would have to hit 6.75% for a bubble to be possible. >> it's not out of the realm of possibility a year or so from now. a lot depends how mortgage rates respond to the quantitative easing program the fed is doing and how much further appreciation we get. >> reporter: rising mortgage rates should temper the big home price spikes, among home builders. they have bee

as for the housing market this quarter, diana olick tells us two words will likely hold the key, interest rates. >> reporter: here is what to watch for in real estate in the quarter ahead. rising interest rates are the wild card for buyer, sellers and big banks. home prices are up over 12% from a year ago according to core logic but the average rate on the 30-year fixed is up nearly a full percentage point that will put added pressure on the home prices and builders raising prices more aggressively. rising rates hit and could mean more layoffs at the backs and could trickle down to the home improvement sector in q 3. investors felt the pain already and could fall more out of favor as rates rise. for "nightly business report," i'm diana olick. >>> they say the consumer is the backbone of the economy and while the consumer is buying, it seems the rate at which the consumer has been spending is relatively stagnant. confidence in the economy is on the rise. will the consumer keep the wallet open or tighten the pursestrin pursestrin pursestrin pursestrings? >> reporter: here is what to watch f

diana olick has more details.ot. >> yes, they are, bertha, but analysts and investors have been down on the rental apartment sector, due to the rise in home sales and prices. the rush to rent that we saw during the housing crash was now shifting back to homeownership. well, rising mortgage rates may change all that. take a look. rents went up, both asking and effective. now the growth is slower than a year ago, but that's due to weak income growth and this before the rate jump even happened. vacancies were flat nationally at 3.4%, but 4.3% is well below the peak of 8% in late 2009. the vacancy declined largely due to more supply coming on. over 26.5,000 new apartments were completed compared to the previous quarter. while they have been moderating lately, the rise in mortgage rates can turn up the heat on them again. starts had been low for multifamily, but now they're running above normal levels. i takes a lot longer to build an apartment building than a house, so this supply won't hit for another two years or so

diana olick with the reality check for us in washington. hi, diana. >> hi, sue.as homeowners were coming up for air and up from under water they are suddenly turning more negative on housing. fewer people think now is a good time to buy or sell a house according to a new survey monthly in june from fannie mae. they fell after numbers hit a survey high number in may thanks to highsing home prices and lower mortgage rates. now rates have soared over a full percentage point and 57% of respondents expect rates to go even higher. that's the highest level in the survey's three-year history. on the bright side and in the short term, this is likely to fuel more home sales. potential buyers are applied rates will go even higher and that's why we saw pending home sales surge higher and after that prices will get priced out. prices will have to come down a bit and one interesting thing from the fannie mae survey, a lot of people think that went rights are going to rise. still very strong rental demand. for more on this go online. >> thank you very much, we'll head up town t

diana olick live in washington with more details on that. hi, diana. >> reporter: yeah, sue, what about the rising mortgage rates? i guess the home builders don't care so much but skeptics tell me they will. the sentiment numbers first. home builder sentiment in july jumped 6 points to 57. 50 is the line between positive and negative, and we only crossed that line last month. they were at 35 one year ago. builders are feeling the best since they have since january of 2006. looking at the three components of the index, current sales rose five points. sales expectations over the next six months took the biggest leap, up seven point and buyer traffic rose five point. the biggest gains were in the midwest, the smallest out west. in the west you still have the final level of distressed homes so, again, buyers not so worried about rising mortgage rates. they are, however, worried about losing the mortgage interest deduction and worried about reform of fannie and freddie and general housing finance. now, the price of supplies they say are easing, an

diana olick, her son just won the district little league championship.ch rather talk about that. >> much rather. go d.c., but on to housing, of course, a slow start at the beginning of the year. home values jumped, and the housing recovery took a more solid footing nationwide, according to a new report from zillow. prices up 5.8% and up 2.4% from q1. let's go local. markets in parts of the northeast, midwest and southeast that had been slow to bounce back, finally started to move. of course, the biggest jumps continue to be in the west with the highest appreciation rates in sacramento and riverside, california, as well as in phoenix. on the rental side. national rents fell in request2, the first quarterly decline after nine consecutive quarters, either increasing or staying flat. rents are still up 1.6% from a rear ago. this spring surge comes as a warning as different toips of buyers enter and exiter the market. the landscape will change. what we're talking about is investors. they pushed prices up so high in some markets that they have priced themselve

diana olick, as you know, covers real estate for cnbc and joins us live now in washington. diana?er: well, sue, you're right, the housing bulls are out in force. even if the numbers don't always support them. we learned today existing home sales in june full unexpectedly due to still tight supply. why are there so few listings out there? because so many potential homeowners, buyers who might want to move up are stuck in place, owing more on their mortgages than their homes are worth. this as the big banks and big build remembers back to bringing in big profits for wall street. david and heather built their oregon home in 2005 at the height of the housing boom. >> we're under water because our timing is outstanding. >> reporter: value of their home was cut in half by the housing crisis. as their family grows, so, too, does their need for more space, so they are now adding extra principal to their monthly mortgage payment. >> we're doing what we can to dig our way out of the hole the old-fashioned way. >> reporter: they thought about walking away. >> i think from a character standpo

diana olick has more. >> reporter: in cities across america, apartment buildings are going up. rental demand took off after the housing crash, some called it rental nation as homeownership went from 69% in 2004 to 65% to the beginning of this year. the reasons were simple, financing and fear. >> i can't afford to buy a house now. >> i'm scared in part due to the fact that my father and mother had a lot of problems with mortgage. >> reporter: just as housing was starting to recover and more renters were considering buying, mortgage rates jumped over a pull percentage point in the past two months. that has some potential buyers more nervous than they were. >> we're actually looking for a place to buy, and right now it seems that the -- from what we understand, the mortgage market was topping. >> reporter: while mortgage rates are throwing a wrench in the recovery, they are breathing new life into the apartment sector. >> mortgage rates going up by 50 to 100 basis points takes out the ability for people to afford to buy a home. >> reporter: they are benefitting the people that dev

diana olick has the details in washington. diana? >> reporter: that's right.e prices were up over 12% in may annually from a year ago and they have been rising steadily for quite a while now. those price gains have given borrowers back much-needed home equity. take a look. the number of underwater borrowers, those who owe more on their mortgages than their homes are currently worth, fell by 41% from q1 of last year to q1 of this year, according to a new report from lender processing services. underwater borrowers represent under 15% of the active loan universe. that's 7.2 million mortgages that are bigger than the value of the homes they back, and that's down from a high of 17 million in 2011. that does not include near negative equity which when you have less than 20% equity in your home it makes it harder to moisture sell, pay and the drop is particularly dramatic in the sand states. in arizona where prices are up 20%, negative equity is down 53% to 18%. california, down 51% to 15.6%, and much the same in florida and nevada, again, according to lps. mortgage

diana olick joins us with those details. >> reporter: just was home prices were rising and anyone wasringing the sellers back, sendly sentiment turned because of rising mortgage rates. in the past month sentiment turned. fewer people think now is a good time to buy or sell a house according to fanny's survey for june. those numbers had just hit a survey high in may thanks to rising home prices and record low mortgage rates. now mortgage rates have soared well over a full percentage point in the two months and 57% of responded to the survey expect it to go higher. on the bright side and in the short term this is likely to fuel more home sales because potential buyers are afraid that rates will go higher so they want to jump in now. that could be why we saw the pending home sales index, that is signed contracts in may, jump to a six year high. a lot of people are going to get priced out at these levels and that will push prices lower. one note, more people think rental rates are going to go higher because rets are still strong and rental demanding strong. we're going to talk about that

diana olick has been following this growing trend. >> that's right, melissa.surging home prices and a lot of cash on the side lines. while it had been buy, hold and rent, suddenly flipping is back and the profits are bigger than ever. over 136,000 single family homes were flipped in the first half of this year, that according to a report out tomorrow from realty track. that's up 74% from the first half of 2011. flipping defined as a home bought and sold within six months. returns are bigger. flippers made an average gross profit of $18,000 per flip in the first half of this year. that's up 246% from a year ago. the average gross return, nine percent on the initial purchase price. of course flippers will put money into the homes for rehab. what are the top flipping markets. florida, omaha, nebraska and pittsburgh, pennsylvania. this surge appears to be largely individual investors, many of them flipping to the hedge funds that are buying to hold and rent. it's the new middle man. >> i would imagine that there are more flipping going on than the study reveals if

diana olick with that. what would you put your money on here, diana?. the most important thing to watch for housing in the second half of the year. they will guide prices, afford ability and demand so where are they going? let's start with rates, shall we. in the past six weeks we'll see the rate on the 30-year fixed go from 3.5% to 4% and head to 5%. that means the average buyer has lost anywhere from 15% to 18% of their purchasing power because that's how much higher their monthly payment will be, so where will mortgage rates go? well, higher appears tonight answer for most of the folks i've spoken, to but, remember, even at around 5% we are still well bloat average rate historically. now, an equal if not bigger issue is inventory. take a look at our recovery watch map from cnbc.com. it's now just in a few places. inventories -- not just in a few places. inventories are down across the nation. not all investors eating up distressed homes. it's near negative equity. about 40% of homeowners with a mortgage don't have enough equity in their homes right

diana olick, is this a reason to worry? >> reporter: no, it's not a reason to worry, but existing home sales was a dig disappoint in june and what's interesting is this story for june is already old because the june numbers are not affected by the recent spike in mortgage rates, sales fell and were revised down in may. these are closings, contracts signed in april and may before the rate spike. inventories rose under 2% month over month and down 8% from a year ago and that's nationally. supplies are even tighter in certain local markets, especially out west and in the northeast. realtors today said they were very disappointed in the drop in housing starts in june reported last week. tight inventories are pushing prices higher. the median price of an existing home, up 13.5% year over year. much of that is because fewer distressed homes are selling and investors are moving out of market. sales of homes priced under $100,000 fell 20% and sales of homes priced over $1 million jumped 25%. investors on the low end, they are out a

diana olick joins us from washington with a look at how rising rates are affecting deals out there. >> the sharp spike in mortgage rates is already taking its toll. take a look. mortgage applications to purchase a home down 3.5% just last week, but down 28% in the past month. real estate agents at an open house in northern virginia say the story of this housing recovery, well, it is changing very quickly. >> what's happening is we're pricing down. over 600 but now 550 and below. >> the quick rate spike is unprecedented, but if you want to see what happened when government stimulus suddenly ends, check out the hangover from the home buyer tax credit in 2010, new home sales dropped 38% in a single month. you see it there. buyer demand was pulled forward. at the same time troubled underwater borrowers were pushed into government loan modifications. the result now is very low inventory which is pushing prices too high too fast. >> what we've done with all the stimulus in the mortgage market is do some serious damage to the natural order of housing where first-time buyers become repeat buy

in a minute we'll show you how ridiculous that all is and let's get the headline with diana olick. >> rising rates mean falling mortgage applications and one analyst is predicting dire consequences for the housing recovery. to that in a second but first take a look, if you will, refis down 4% last week to a two-year low. that is continuing to take away from consumer spending power. purchase applications were down 3% last week and down 28% in just the past month. now, we visited an open house with real estate agents out in northern virginia, and they say the story of this housing recovery is changing very quickly. >> what's happening is we're pricing down. if they were qualified up to 600, now we're looking 550 and below. >> so you have this acute inventory shortage right now out there which pushed home prices up 12% from a year ago and a rate jump which has taken away around 15% of your average buyers' purchasing power. noted analyst mark hanson based in california calls all this unprecedented, barely comparable to the end of the home buyer tax credit in 2010. >> that stimulus was so

aubrey cohen is with the seattle post intelligencer, caroline and diana olick joins us, just back from house in virginia, in fact. aubrey, first to you. seattle, in fact, one of the hottest markets in the country. we've seen home prices up quite a bit there. the tech economy doing a little bit better as well. but in terms of conditions on the ground since this back up in mortgage rates, what are you seeing? >> the story's inventory. there just aren't enough houses for all of the people who want to buy them. you know, generally, we consider about six months of supply to be a balanced market. well, a year ago, we were at, like, two and a half months. and then, a couple of months ago, it was a month and a half. it's actually gotten a little bit better since then. it tooked up to 1.7 months last month. but that's still incredibly low. that's driving up prices. we've had double-digit increases in the median prices. >> right. aubrey, now that rates have moved, what are people doing? is that spurring them to jump into the market, or is it making them hold off? >> well, you know, the market ha

i'm going to turn it over to diana olick who is here with me at the nyse.ee you. >> reporter: good to see you, too. so perfect we're right here downtown which is one of the hottest real estate markets in manhattan. sales across the island were the highest since 2007 this past spring and prices down here are rising fast, especially for new development. up 36% from a year ago. now, when we talk new developments in manhattan, we're talking condos, not co-ops. developers are targeting the high end with the condos. the top 10% of the manhattan market, which means over the $3 million mark. now the median sale price for a conditionedo, 1.25 million, but for a co-op, just a mere $665,000. condo sales were up nearly 16% in q2 and the median condo price rose nearly 14%, not the case with co-ops. sales are up and supplies are solo down 28% from a year ago. prices were actually flat for co-ops, likely because they don't see the foreign all-cash buyers that the condos do, so why are supplies so low? well, it's the same reason as the rest of the country. a minute manhatt

our housing reporter diana olick has more on this. all of this to us. >> reporter: well, mandy, the bill is called the save act, and what it does is it allows you to take energy savings from things like the solar panels and take those savings and have the lenders apply that to your mortgage calculation. so you could actually qualify for a larger loan. >> it's about energy efficiency. it's about savings. it's bin creasing the borrowing power of the borrower. it's a win-win proposition for the industry. >> reporter: here's how it works. energy savings are factored into how much a borrower can afford for the monthly mortgage payment. essentially subtracting the savings in your energy bill from your monthly debt, which lenders factor against your income. it also tells lenders to add the value of the expected energy savings to the value of the home appraisal. since mortgage amounts are based on a percentage of the value of the home, this would allow borrowers to get a bigger loan. now, it would also help companies that are invested heavily

with us now is cnbc's resident housing expert diana olick, and also mike aubrey, a realtor in the washingtonc., area, and host of the new "hgtv show debuting today called "power broker." jared jones is in las vegas. diana, to you, what's going on, and is this a problem for the housing market? >> the first-time home buyer has always been the foundation of the housing market. they usually make up 40% and 45% of all home buyers, but in june, they made up just 29%, according to the realtors. why? because they're in competition with investors. they're usually looking on the lower end of the market. and while investors are usually all cash, the first-time home buyer needs a mortgage, and that is more difficult. and so, they end up in this competition where cash is king, and they're losing out. >> mike, what are you seeing with respect to first-time buyers in the d.c. area? a lot of pressure on them? >> absolutely. the market is absolutely blistering right now in d.c. and i think diana hit it exactly right on the nose. the problem is that underwriting standards are still so amazingly tenuous, to ge

diana olick is here to wrap it all up for us. she's live in washington. >> hey, sue. the starts were a surprise, the mortgage applications not much. applications to buy a home were up 1% week to week and down 5% in the last four weeks. refi applications were down 4% and down nearly 27% for the month, this as mortgage rates were unchanged, the average rate on the 30-year fixed 4.6% and it is down from the spike a few weeks ago but higher than the lows of early mau, and ironically rates moved lower as we got bad news on the home building front. and to that housing starts down 10%, driven mostly by a 26% drop in multi-family. single family starts were essentially flat, down under 1% for the month but up 11.5% from a year ago. permits considered a more dependable stat were up just under 1% for single family and down nearly 23% for multi-family month to month suggesting lower starts and in the coming months ahead despite high demand. we'll talk much more about the builders coming up on "street signs" and online we'll talk about how housing confidence is still high despite

the latest multinational to say bad things about the global economy and now over to the data from diana olicka? >> that is right, carl. home builders fell flat and this is from the national association of home builders and given the rising rates in june and july and the expectation for flat, and jumped six points to 5750 which is the line between positive and negative and this is the highest level since january of 2006 and the three co components is current sales rose five point, and sales expectations rising 7 points, and the buyer traffic rising 5 points and buyer traffic is only one in the negative at 4.5. home builders are warning possible policy threats ahead given the mortgage financing and the mortgage interest deduction that could derail the recovery among the home builders, but cite prices for land and labor and prices are softening a little bit which is good news, because they have been high and hampering the rise, but this is good news for the home builder index sentiment. >> and diana olick, nobody expected that jump. let's bring in the fed president, well, not fed president, but

diana olick in washington., a showdown in the federal court is beginning a bankruptcy hearing over the bankruptcy hearing. a judge is deciding whether to dismiss lawsuits filed by pension boards and labor unions on the bankruptcy because of the violation of the constitution. scott cohn is inside of the hearing room, and when we keep a tight look at the situation, carl. >> yes, apple's earnings are surging. and iphone sales saw a pop, but there was a decline for the second consecutive quarter of ssi. there is a target price of 600. and guys, good morning to both of you. eric, let me start with you. you said that basically pretty good to neutral in terms of the actual results, but we are in a period where it is really new products time to shine, a san diego that going the happen? >> well, if you look back at apple's history, jim, it has been traditionally in the fall and the new year where apple starts to set the table with the new products and either coming out in the later in the year or the consumer heightened

back to you guys. >> thank you, diana olick.s johnson and johnson and a lot of people familiar with the company, and the shares are down 9.5%, and this is in the wake of china launching a probe of foreign makers of infant formula and alleging a price fixing operation. in the wake of this wells fargo cut the rating on the stock to market performance and lowering the price projection to mead johnson. and goldman removing it from the stock list, and went to neutral. again, it is down 9.5%. carl, back to you. >> yes. >>> looking at the live shot of cairo, and the deadline for the army has essentially passed and president morsi rejecting that deal, and we are keeping an eye on egypt as it could change at any moment. here is how the egyptian markets are faring this morning. >>> well, it is officially beach season. so why not grab those rays in style by packing up all of your needs in this cnbc tote bag signed by the entire "squawk on the street" gang. it can be yours if you can guess friday's nonpharm number. go to #nail the number. y

diana olick is live in washington with detail s s on t this friday. diana. >> that is right, simon.from your home from green technology like the solar panels on this home add to the value on your home in the appraisal and more importantly in the mortgage calculation. by doing that, you allow the borrower to get a bigger loan. >> it is about energy efficiency, and savings and increasing the borrowing power of the borrower, and a win-win for the industry. >> it is a bipartisan bill in the senate called the save act. what it does is two things. it requires the lenders whose loans are backed by the federal government which is now about 90% of the market to account for expected energy cost savings and those savings are then factored in to how much a borrower can afford for the monthly mortgage payment, and it is essentially subtracting the savings from the energy bill to your monthly expen expenses, and says to add the value to the home in the appraisal, and since the homes are based on the value of the percentage in the home, this would allow the borrowers to get that bigger mortgage an

diana olick has details on that for us. diana? >> that's right, bill. just a little bit in the past couple days, they'll likely go right back up again and that is hitting mortgage refinances particularly hard. take a look. applications to refinance fell 16% week to week seasonal adjusted to the lowest level since july of 2011. refis make up just 64% of all mortgage applications. that's down from the 80% range when rates were at rock bottom. you can expect to see the effects of that in home renovations because refis usually fuel those. purchase applications fell but not so hard, down just 3%. that's because affordability is still pretty good. also some potential buyers who might have been on the fence about a purchase may have just jumped in. >> applications for new home purchase have basically continued to move sideways over the last month, but that may be that people are rushing in to buy or lock in mortgage rate before rates move even higher. so it may be that there's going to be a bit of a lag effect. >> now, going from 3.5% to 4.5% may not sound lik

diana olick on the strength of the housing recovery. over to a man who knows a lot about rates.k about munis and list nick to diana talk about the rise in interest rates, let's switch gears on the fly here and talk about something else, reits. today i've probably been handed five major articles written about reits but i'd rather go back to some articles i read in january, february and march. there's been various points of escalation for various reasons but in the end i remember the doom and gloomers saying the reits would have some problems and the answer is simple in, a de-researching mode. short-term funding, historic lows creates a bunch of problems when those low rates don't remain low. leverage short-term funding. let's look at the typical reit before the debacle started. most articles said if you want to get nervous look at the debt to equity. remember, they pay out all their dough in dividends. debt to equity was anywhere from 7-1 to 10-1. you would cry in you read this. huge market caps very little in the form of sales revenue, and when you look at most of these securiti

diana olick has details in washington. >> we know home prices have been riding dramatically lately duerrowers back much needed home equity. the number of underwater borrowers who owe more on mortgages than hopes are worth, fell by 47% from q1 of last year to q1 of this year according to a new report. underwater borrowers represent just under 15% of the active loans. real number 7.2 million mortgages larger than the value of the homes they back. that does not include, though near negative equity when the borrower has less than 20% equity in the home and would not have enough to move to a more expensive home. the drop is dramatic in the stage which had the largest volume because prices fallen dramatically. ard arizona prices up, negative equity down 53% to 18%. california, it's down 51%. and much the same in florida and nevada, again according to lps. mortgage delinquencies down also over 15% at the end of may, year to date. that's the largest drop in 11 years. why in negative equities a primary drive of default. that's good news. bad news, these numbers are from q1 when mortgage rates w

it's so busy, in fact, that diana olick had to come here to check it out.es up 19% from a year ago. inventory in q2 was the lowest for the quarter on record. why? same story as the rest of the country. negative and near negative equity. new yorkers are stuck in place unable to sell. >> they just have low equity. they may have refinanced, taken out a second mortgage. when they bought the home, they may have been able to figure out a way to put a small amount down, smaller than what was known about. it's the same problem here that it is everywhere else. >> so with so little supply, prices moved higher up nearly 14% for condos from a year ago, but flat for co-ops which make up 75% of manhattan market. so why the difference? well, foreign buyers with all cash are fueling the condo market. the median sale price for a condo $1.25 million, but for a co-op just $665,000. and condos are where all the new development is. developers are targeting the high end with these condos. the top 10% of the manhattan market, which means over the $3 million mark. >> we've become