Existing-home sales fell from May levels, but have managed to beat out year ago levels for the past two years.

Home values continue to rise with the median home price seeing a double-digit year-over-year increase for the seventh consecutive month, according to the National Association of Realtors

Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — dropped 1.2% to a seasonally adjusted annual rate of 5.08 million in June, falling from a downwardly revised 5.14 million in May. However, sales are 15.2% higher than the 4.41 million-unit level in June 2012. 

NAR Chief Economist Lawrence Yun said the market lacks momentum, even with interest rates continuing to rise. 

"Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand," he said. "However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market." 

The national average commitment rate for a 30-year, fixed-rate mortgage increased to 4.07% in June, up from 3.54% in May. This marks the highest rates the market has seen since October 2011 when rates were at 4.07%. Last June, the rate was 3.68%.

"The effect of higher mortgage rates may be seen in the fall-off from pending home sales data, which jumped sharply in June as contracts were signed. But apparently many of these contracts didn't close which perhaps points to lending issues," noted analysts at Econoday.

Inventory has finally started to make its turnaround as well, with total housing inventory up 1.9% at the end of June to 2.19 million existing homes available for sale. This 5.2-month supply is up from 5 months in May. However, inventory still remains an issue for buyers with it hovering 7.6% below year ago levels, when there was a 6.4-month supply. 

"Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth," Yun said. 

Home prices continue to be a bright spot in the housing industry, with the national median existing-home price reaching $214,200 in June, up 13.5% from June 2012. Last month marks the 16th consecutive month of year-over-year price increases. 

Distressed sales continue to make up a smaller and smaller portion of total sales, with distressed homes making up 15% of total June sales, down from 18% in May.

In June 2012, distressed homes totaled 26% of all sales. The drop in distressed sales is a key factor behind the rise in the median home price.

"A lack of distressed properties is one major reason behind the tight supply with related sales at only 15% in the month for the lowest reading since this number has been tracked beginning in 2008. Foreclosures only made up 8% of the month's sales," Econoday analysts added.

NAR President Gary Thomas said some owners who were originally hurt by the downturn are now in the market.  "Rising values have improved the position of homeowners, and 16% of Realtors surveyed in June report they worked with a client that previously had an underwater mortgage," he said. 

Thomas noted that, of those previously underwater owners, 53% were planning to buy another home and 22% intend to rent, although 25% weren’t sure what they’d do. 

A still-tight inventory means homes continue to fly off the market, as the median time spent on market for all homes dropped from 41 days in May to 37 days in June. One year ago, the median time on market was 70 days, 47% higher than it is now.