The country's economic engine seems to be running in reverse as more expensive borrowing spurs home sales, and an uptick in borrowing sends mortgage rates back down.

Image by magro_kr via Flickr

The recent surge in mortgage rates, by all rational calculations, should have made America's already troubled housing market worse off. Instead, higher borrowing costs modestly boosted homes sales in November.

Before slipping down slightly this week, mortgage rates had risen for several weeks in a row as yields on 10-year Treasury bills, which largely influence the cost of mortgages, rose. The average rate for a 30-year fixed loan increased to 4.83% in the week ending December 16 from 4.61% the previous week, marking a fourth week of increases, (). The rate increases were some of the highest seen since June of this year.

Intuitively, it would make sense that higher borrowing costs would discourage potential homebuyers. And vice versa. But quite the opposite has happened.

Before the recent surge, mortgage rates had fallen to historic lows but failed to spur much refinancing or home purchases as virtually all major banks tightened lending standards. When mortgage rates started rising recently, potential homebuyers waiting in the sidelines took notice.

In November, the share of home purchases by first-time buyers surged to 37.2% from 34.4% the previous month, according to a monthly survey by Campbell/Inside Mortgage Finance, which tracks mortgage and housing industry trends.

"That's extremely significant," says Tom Popik, the survey's research director. Since the survey launched in 2009, there's typically only been a one-percentage point change, if any at all, among first-time homebuyers.

The higher rates seem to have served as a warning shot, drawing in buyers eager to lock in historically low rates before they edge any higher. In a sense, they were waiting for an uptick to prove that rates had gone as far down as possible, before deciding to buy. Unlike current homeowners, first timers are positioned well to respond quickly to fluctuations in mortgage rates.

Popik says it's unlikely the rise in rates will spur many more home purchases. After a while, potential homebuyers will again think mortgages are becoming too expensive. For now though, rising rates have brought a boost, however small, to the struggling housing market. November sales of new homes rose 5.5% to a seasonally adjusted annual rate of 290,000 units, .

Naturally, in response to the uptick in home sales and increase in demand for lending, . Somewhere, that makes perfect sense.

More from Fortune:

ForeclosureDataBank wrote:

"Interest rates going up will destroy the real estate market. No one really has the money to buy now and they won't when interest rates are up."

Simply not true. There are plenty of people that will buy; they just aren't going to pay the crazy ass prices people think they are going to get for them. I know because I am one of them. I could buy 3 decent size houses using cash right now, but why would I want to throw all that good money away on a rapidly depreciating asset? Smart investors (those who actually have money) will wait for interest rates to rise and government subsidies to dissolve before purchasing a house.

Posted By JJ, NY: December 28, 2010 10:55 am

Is it just me or does this analysis make no sense? The interest rates started spiking in early Dec. and were still at all time lows even in late Nov. Additionally, you typically lock-in a rate 30 days before close, which means that Oct. or Nov. rates had influence on Nov. sales. So to say that the rates spiking in Dec. had any influence on homes sold in Nov. is just poor analysis. You need to compare homes sold in Dec. or Jan. to interest rates spiking in Dec, and anyone want to wager that they go lower and not higher? Whoever writes this crap and their editor need to find new jobs as they are posting mindless articles that make no sense at all.

Posted By Craig B., Huntington Beach, California: December 28, 2010 2:37 am

I wrote "USA has no debt to China and Japan etc...."
Cheers , why did you pick up only Japan. You shold say like this Mr Okazaki you do not know USA has also huge debt to China also and Japan. Mr Okazaki didi not know it ? I wrote irony. and I stated my opinion like irony. Did you learn mathematics or mathematical logic or logic , to prove things.
to try to prove the matter,
there are four way.
I majored i mathematicsand physics.
Physics said energy will be always same.
and you took same way, you took same result.
or Energy is not made nor killed. is forever.
we can proof by the reverse way.
matt

Posted By matt Okazaki, New Philadelphia ,Ohio 44663: December 27, 2010 9:40 pm

I got surprised to take the Fortune comment to my comment.
I say straight talk. The price of house will keep on going down down to the level of 40 years in most places in USA.
Eveybody know that USA has huge debt to China and Japan etc. Any state has huge debt. Most person has huge debt.
Any state has unsustainable debt. Any municipality has huge debt. And USA had had bailed out banks and some big companies. This is the remedy that destine the USA economy to keep to going down without end. USA had the same method against bubble as Japan. It means USA is destined to have same effect as Japan. The trice of House has any chances to go up except a coupe of big city.
If fortune were confident to the price of USA house going to go up up up way to the moon even in long future.put my opinion on your comment.
You can call me idiot, stupid.o rmentally retarded, but if you were confident to your forecast, put my opinion as it is.show your courage. your answer to my opinion show your intelligently not perfrct. you do not have propensity to understand reverse expression. If you knew, you try to manipulate comment and try to create fake. who can tell future? Lets see the future will unfold.

Posted By matt Okazaki, New Philadelphia ,Ohio 44663: December 27, 2010 6:20 pm

*matt Okazaki*
Are you seeing the truth?
US owes lots of money to Japan.
--
Japan
•A great deal of media attention is paid to the amount of money the United States owes to China. However, the U.S. owes a comparable amount of money to Japan. The difference between the debt owed to China and to Japan is approximately $100 billion. About 20 percent of the overall U.S. debt is owed to Japan. ---

Posted By cheers: December 27, 2010 4:13 pm

Interest rates going up will destroy the real estate market. No one really has the money to buy now and they won't when interest rates are up.

Posted By ForeclosureDataBank, Miami, FL: December 27, 2010 11:45 am

Another mortgage increase will shut many would be home owners out and will further lower home prices. Rates should continue to be between around 4% until all the current house/shadow inventory is broght under control. The main focus should be on continuing to decrease unemployment. Its hard to think about buying a house when you are wondering if you will have a job tomorrow.

Posted By S F, Tustin CA: December 27, 2010 2:15 am

People should buy the houses as soon as possible, as many as possible. The difference of rate makes any matter, cause the prospect of prise hike of house price in USA is unbelievably exorbitantly huge as you can not imagine.
The price of houses will skyrocket up to unlimited universe nobody can imagine. Pls remember the cool fact that USA didi not bail out any banks and any companies. And USA is debt free country, as USA as nation has any debt to China and Japan etc, no citizen has debt, no company has debt,no state has debt, no municipality has debt. see
USA is far better than poor, miserable Japanese economy.
Japan did bail out any banks and merge the many banks,and shelve the huge loss of bank or hide.
Theprice of house has kept on going down down every year in this twenty years. And at last, price of house reached to the level of 45 years ago(in Narita near Tokyo International Airport ) except a couple of mega cities as 10 million populace Tokyo.
This happened in only ,only, only in poor, miserable, deplorable Japan.
USA is completely different form Japan.
The price of house will surely skyrocket in near future, no doubt. People should buy house today , not tomorrow.
The pace of price hike might be beyond your imagination.
God bless America. America is so Great country.
Great.

Posted By matt Okazaki, New Philadelphia ,Ohio 44663: December 26, 2010 6:35 pm

I will agree with Ryan from Cleveland and merge it with the high rates. Banks lowered their lending standards because they saw more profit on the horizon. Thats why those in that 30 day contracts started processing.

Posted By Rodney, Orlando: December 24, 2010 8:50 am

I have to agree with Ryan from Cleveland, OH. Ryan, I always thought this of weathermen, but I never thought about it with reporters. I still think the weathermen are number 1 in this discussion.
Mortgage rates can move around a narrow band, but if they spike up significantly, buyers WILL be spooked and we do NOT want that to happen to an already damaged housing industry. In order to resolve the crisis we need a plan which SOLVES the crisis and not just band-aids it. Please read the plan I have been advocating for two years:

Thank you!

Posted By Ann North Attleboro, MA: December 23, 2010 7:43 pm

It has nothing to do with buyers. Buyers are always throwing what the sellers call "lowball offers" at them. It is the sellers that are giving in to fear when they realize the offers will be much lower when interest rates rise.

Posted By JJ, NY: December 23, 2010 6:11 pm

Its likley that the good November numbers were a result of the low rates that still were available through most of November. The rates did'nt tick up until the end of the month.

Posted By Tom, Plainfield IL: December 23, 2010 5:43 pm

Just an FYI - most sales contracts are for 30 days and most people lock a loan when they are in contract so most of the people who have recently closed a loan were locked in prior to the rates going up. I swear being a weatherman and a business reporter are the only professions where you can be completely wrong and still get paid...

Posted By Ryan Cleveland OH: December 23, 2010 5:12 pm « »CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. .

Nin-Hai Tseng covers economics and finance for Fortune.com. Tseng was previously a reporter at The Orlando Sentinel, covering development and land-use policy, and a public affairs associate at GE. She has a graduate degree in international economic policy from Columbia University. She lives in New York City.

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