New York CNN Business  — 

Mortgage rates have been steadily rising this year, but that doesn’t seem to be slowing demand for housing — yet.

According to Freddie Mac, the average rate on a 30-year mortgage is now 3.05%, up from the all-time low of 2.67% at the end of 2020. Rising long-term bond yields could lead to even higher mortgage rates in the not-so-distant future.

So the question is whether the housing market — which remained surprisingly resilient as consumers fled cities for more space in the suburbs during the early days of the coronavirus outbreak — will continue to hold up well if mortgage rates keep climbing.

Homebuilder Lennar (LEN) remains confident, and the company reported earnings and sales that topped Wall Street’s forecasts after Tuesday’s closing bell.

“In spite of a recent uptick in interest rates, the housing market remains very strong across the country,” said Stuart Miller, Lennar’s executive chairman, in the earnings release.

Lennar’s shares rose 14% on the news and are now up nearly 35% this year. The SPDR S&P Homebuilders ETF (XHB) is up more than 15% as well in 2021.

Miller noted that demand is still healthy, in large part because many consumers have been saving money during the pandemic and have bolstered their savings with stimulus money from the federal government.

And the well-documented housing shortage has boosted prices due to the low supply of homes on the market, he said. Even so, Lennar said in its earnings release that new home sales were up 26% from a year ago.

“The housing market has proven to be resilient in the current environment and we expect it to continue to be a significant driver in the recovery of the overall economy,” Miller added.

Rising rates not a problem for buyers but refi demand could take a hit

The spike in mortgage rates could be a bigger issue for existing homeowners than for first-time home buyers or those moving from one place to another.

The Mortgage Bankers Association reported Wednesday that while overall mortgage loan demand was down this week from the one prior, the shift was due entirely to a slowdown in refinancing activity as rates rise.

Looking deeper at the MBA data, volume for mortgage applications taken out to buy new homes actually rose from a week ago and have risen 5% from the same time last year.

“The purchase market helped offset the slump in refinances,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “The recovering job market and demographic factors drive demand, despite ongoing supply and affordability constraints.”

Housing market may cool, but not fall off a cliff

Still, there are some concerns that the housing market will inevitably cool off. The most recent figures for building permits and housing starts for February could be a warning sign.

The government reported Wednesday morning that permits and starts both fell more than 10% last month compared to January. The drop could be due to winter storms and unusually cold weather in the South and Midwest.

Economists at Barclays said in a report Wednesday that the February data “suggests clear adverse weather effects on starts, which we think will likely be temporary and expect to unwind in the coming months.”

Even so, the trend bears watching.

“Weather clearly played a role, but it probably wasn’t the only factor,” said Aneta Markowska, chief financial economist at Jefferies, in a report Wednesday. “The best months for housing are now probably behind us.”

There is a silver lining, Markowska added: Any slowdown in the housing market right now is unlikely to ripple out into the broader economy.

“There is plenty of support for other sectors of the economy, notably consumer demand and manufacturing,” she noted.

In other words, this isn’t 2008 all over again.