The March CoreLogic Case-Shiller national home price index was reported this week and it came in with a spike up from 12% to 13.2% in one month. That is a strong price increase. With mortgage rates still very low, and the supply of existing homes tight prices are going to continue to climb. New home construction, out this week, was 863,000 for April down from 917,000 the month before, well short of expectation. To add to the pressure of rising prices is a huge increase in wood and almost every material that goes into building a new home.
Until mortgage rates increase it is hard to find a scenario in which home prices might ease. Our economy is in a recovery phase so people will feel confident about buying and owning a home. There is no bubble ‘yet’ but the pieces are there to blow one up.