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Economists attribute much of the U.S housing slowdown to this year’s increase in mortgage rates. Rates last month hit a seven-year high, which may discourage many potential buyers from purchasing a home.

Bloomberg's Prashant Gopal reports:

“It’s a useful test case for housing demand,” said Robert Dietz, the National Association of Home Builders’ chief economist. “We should see some stabilization in the pace of sales. The concern would be if we don’t -- then other factors are at play.”

If sales don’t improve in coming months, buyers might be losing confidence in the economy, he said. On the other hand, if demand increases, it’s likely to be temporary. Rates for 30-year loans will reach 5.25 percent by the end of next year, Dietz projects.

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