First the good news: Mortgage interest rates ticked downward for a second straight week. But it’s still been a volatile ride in recent months, and the general direction of interest rates for home loans has been up.

What does that mean?

If you’re a home buyer, that means the money you’ve budgeted for housing doesn’t go as far, in terms of the price you can offer to pay.

If you’re a home seller or home owner, a spike in interest rates can sometimes stall or even reverse the trend of rising home values. But the damage of rising interest rates doesn’t appear to be as bad as you might expect. History tells the tale, as we’ll see in a moment.

As of Thursday, the latest average interest on a 30-year fixed-rate loan is 4.31 percent a year, according to the firm Freddie Mac. That’s down from 4.51 percent two weeks ago.

Still, current US mortgage rates are also up a full percentage point from where they stood back in January. So the fact that their upward race has stalled, for a couple of weeks at least, is welcome news for the housing market.

“Mortgage rates eased for the second consecutive week which should help to alleviate market concerns of a slowdown in the housing market,” Frank Nothaft, chief economist of Freddie Mac, said in a statement released with the weekly mortgage data. “Existing home sales for June were the second highest since November 2009 and new home sales were the strongest since May 2008.”

The progress in the housing market is important for the whole economy, providing some important fuel at a time when gross domestic product is growing only modestly.

Home prices have been rising, boosting consumer wealth, and construction jobs have been aided by a relative shortage of homes for sale.

Many economists say modestly rising mortgage rates aren’t likely to stop the housing recovery. For one thing, mortgage rates are still historically low.

History suggests that moves in mortgage rates can exert an influence on home prices – in the opposite direction. But in some cases the damage isn’t very bad.

US mortgage rates tick downward again: Good news for home prices? – CSMonitor.com.

Could rising mortgage rates derail the housing market’s slow healing? Economists in the latest Wall Street Journal survey are divided on the question. Among those surveyed, 40% said the rise “won’t have a noticeable effect,” 35.6% warned “it will slow sales” and 24.4% said “it will slow home-price gains.”

There’s no doubting the housing market’s contribution to the overall recovery. Federal Reserve Chairman Ben Bernanke, in starting two days of congressional testimony, on Wednesday told lawmakers that  “housing has contributed significantly to recent gains in economic activity. Home sales, house prices, and residential construction have moved up over the past year, supported by low mortgage rates and improved confidence in both the housing market and the economy.” The Fed chief seemed to place himself within the no “noticeable effect,” camp, but added, “Housing activity and prices seem likely to continue to recover, notwithstanding the recent increases in mortgage rates, but it will be important to monitor developments in this sector carefully.”

In the Fed’s periodic report on regional economic conditions, issued Wednesday, the central bank sounded a relatively upbeat note, saying “Residential real estate activity increased at a moderate to strong pace in most Districts.” The beige book continued, “Most Districts reported increases in home sales.”

Interest rates on 30-year fixed-rate mortgages have jumped in the recent months, climbing in the most recent week to 4.37%, up more than a percentage point from the 3.35% level of early May. However, even with the climb, rates are lower than they have been in decades.

That historical perspective is important, said Stephen Stanley, of Pierpont Securities, who noted “rates were so incredibly low before they can rise significantly and still be incredibly attractive by historical standards.”

Mr. Stanley said the housing market’s healing is likely to continue because—despite the rise in rates—the fact that home prices are going up…is an overwhelming incentive for people.”

John Lonski, ofMoody’s MCO +0.02% Analytics, sees rising rates affecting sales, and points to mortgage applications for home purchases to support his point. During the four-week period ended July 12, those applications were down 5% from their 2013 high, during the four weeks ended May 3, Mr. Lonski said. “This tends to suggest that higher mortgage yields will at least slow the housing recovery.”

He added, “It doesn’t mean that home sales are about to collapse or contract. But they will be slowed by costlier mortgages.”

Will Rising Mortgage Rates Halt The Housing Rebound? – Real Time Economics – WSJ.