For the third consecutive week, the mortgage rates have increased according to the recent Freddie Mac survey of lenders, the Los Angeles Times reported.

The survey's average mortgage rate for the conventional 30-year home loan is now at 3.85 percent -- a significant jump from the recorded 3.80 percent rate last week. The fixed rate for the shorter 15-year home loan increased to 3.07 percent from 3.02 last week.

Reason for the Hike

When economy improves, rates also are driven up, says Len Kiefer, Freddie's deputy chief economist. Kiefer also added that the situation will continue to improve in the coming weeks.

The Good News

The chief economist noted that the labor market had gained 223,000 jobs in April, which is "a solid rebound" from the recorded increase of only 85,000 jobs in March. Kiefer also shared that the unemployment rate has dropped to 5.4 percent, resulting to lower unemployment benefits claims filed.

Advice to First-time Home Buyers

Thus, with the increasing rates, renters who seek to purchase homes should consider doing their move now because circumstances change, especially with the recent news about increasing home prices. Apart from the rising home prices, limited supply should motivate would-be home buyers to act fast as competition heats up.

High Prices, Limited Supply

A recent study by the National Association of Realtors showed that home prices rose due to tight inventory of available homes in the market. The national median existing single-family home price in the first quarter of the year was $205,200, a 7.4 percent gain from $191,100 of the first quarter of last year, noted NAR.

The group reports that at the end of the first quarter, only 2.00 million existing homes are available for sale, showing an unhealthy 4.6 months supply, with six to seven months considered as healthy supply for buyers and sellers.

The tight supply resulted to home prices accelerating during the first quarter of the year, and "the number of areas posting double-digit price appreciation doubled" compared to the 2014 Q4, the NAR adds. Out of 174 metros, 148 or 85 percent of these markets posted home appreciation.

Housing Supply Should Improve, for a Healthy Price Growth

Lawrence Yun, NAR chief economist explains how home prices picked up from the healthier levels of growth at 2014 Q4 to the recent data.

"Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market. However, stronger demand without increasing supply led to faster price growth in many markets," Yun said.