Income and interest rates. Those are the two biggest factors influencing the U.S. housing market and income, of course, is related to the job market. And today, for the first time in the past year, 30-year mortgage rates are lower than they were a year ago.

Freddie Mac, one of two quasi government institutions that support the mortgage market, is reporting this morning that the 30-year fixed loan rate averaged 4.14% for the week ending June 26 compared to 4.46% a year ago and 4.17% the previous week.

Related: Shiller: Rising rates won’t crush housing

The Commerce Department reports that incomes grew 0.4% in May but spending rose only half that much and only because prices increased, not because of stronger demand.

Doug Duncan, chief economist at Fannie Mae, the other government mortgage giant, tells The Daily Ticker that the impact of rising rates will be muted if real income, adjusted for inflation, rises along with rates. But, he says, "If rates rise in the absence of that income growth that would be troubling."

[Click here to check home loan rates in your area.]

Duncan says the housing market has been relatively flat this year largely because of the "rate shock" occurring around this time last year which sent rates 1.2% higher in just five months. Comments by then Fed chairman Ben Bernanke that the Fed could begin to taper its asset purchases later in the year sparked the rate rise.

Related: The growing wealth divide in the U.S. housing market

"Sudden rate shocks like that tend to result in a decline in home sales and a moderation of price increases, which is what we're seeing this time," says Duncan.

The S&P/Case-Shiller index out earlier this week showed home prices increasing at a slower rate than earlier this year -- up 10.8% compared to 12.4% the previous month and less than forecast.

Duncan agrees with Shiller that cities like San Francisco and Las Vegas are "bubbly" but he expects such price bubbles will be limited since bubbles "very much depend on where there is employment growth" and the Labor Department reports that 33 of 50 states haven't yet recovered to full employment.

Existing home sales rose 4.9% between April and May but were down 5% from a year ago. New home sales jumped 18.6% in those two months and 17.3% from a year ago.

Fannie Mae expects by the end of this year new home sales will rise 12% to 15% and existing home sales will decline. But it expects total home sales-- including single family, multi-family and manufactured homes will end the year about 2% lower than last year.

"Housing hasn't been derailed," says Duncan. "But if construction were at normal demographic levels we would have about 1.6 million units. We've gone from 600,000 to above a million so we still have a ways to go to get back to normal."

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