Home prices are rising at the fastest rate in years, with some areas even seeing double-digit increases.

"Nobody that I'm aware of anticipated the kind of price growth that we've had," says Budge Huskey, chief executive of Coldwell Banker Real Estate LLC. "It's simple supply and demand."

“Supplies have dwindled as banks have pushed fewer homes through foreclosure and because many home owners are either unable or unwilling to sell due to a variety of factors related to the housing-crash hangover,” The Wall Street Journal reports.

“Meanwhile, demand has picked up as the economy has added jobs, which has boosted household formation. Rising rents and falling mortgage rates have made ownership more attractive.”

Home ownership remains highly affordable, mostly due to ultra low mortgage rates. In fact, if mortgage rates continue to remain near 3.5 percent, home values would need to increase by 32 percent nationwide for housing affordability to return to its long-run average, and by up to 48 percent in markets across the Midwest and north Florida, according to a study by John Burns Real Estate Consulting in Irvine, Calif. 

Despite recent home price increases, “in many instances, owning still beats renting,” says Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “I don’t think this is bubble-like at all.” 

Source: Wall Street Journal