Home prices are still on the rise however slowing down. From 5.6% gain in March to a 5.5% year over year. Home Prices could hit a ceiling, according to the S&P Dow Jones Indices committee Chairman and managing director, but not give way to collapse. The question is since home prices continue to rise faster than inflation could this be a bubble? Demand is exceeding supply and financing is available, there is nothing now to keep prices from going up. The inventory of new or existing homes has shrunk down to only a four month supply. Mortgage rates staying below 4% is pressuring pricing and affordability is not an issue. Blitzer says there is no way prices can continue to rise without a limit, the fear we all have is will it crash and take the economy with them. The answer is no, mortgage defaults are low and household debt level manageable, households financing should be able to weather a fairly large price drop.
Home Prices Mount at Slower Pace