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House prices are on an epic run



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Home sellers celebrate like in 2006.

Real estate prices rose 6.3% annually in February, according to the latest S & P CoreLogic Case-Shiller indexes.

At national level, house prices have risen by 6.7% since their peak in July 2006 and have continued to rise over the last 70 months.

"It's becoming increasingly difficult to be a buyer," said Keith Gumbinger, vice president of HSH.com.

Homebuyers in Seattle, Las Vegas and San Francisco face the biggest increases. Seattle prices rose the most, with a 12.7% increase over the previous year, while Las Vegas prices rose 11.6%.

But so far, skyrocketing home buyers have not stopped exploding price increases. Houses are still flying off the shelves.

For example, the typical property in Seattle spent 29 days in the market in February, according to Realtor.com. In Vegas, the time spent on the market was 42 days and houses in San Francisco sold in just 21 days.

Related: Looking to buy your first home? Good luck with it

Given a flourishing labor market, steady economic growth and rising wages, house prices are unlikely to slow down so quickly.

The low housing supply has pushed up prices as demand increases. The competition is tough, with above-mentioned price quotes and bidding battles are frequent events in the hottest markets in the country.

Mortgage rates have also worsened, adding to the affordability problem faced by many homeowners .

"There is no slowdown in rising real estate prices," said Lawrence Yun, chief economist of the National Associate of Realtors, in a Tuesday morning statement. "Even if the tense labor market starts to boost incomes, potential buyers face a double blow to rapidly rising home prices and higher mortgage rates."

Related: Rent vs. Buy: What can you afford?

The 30-year mortgage rate has risen by half a percentage point over the past year, according to Freddie Mac, but at 4.47% Interest rates are still below the historical average. The only thing that could slow demand is when interest rates on 30-year fixed-rate mortgages climb over 5%, Gumbinger said.

"There is an important psychological point to exceeding 5%," he said. "Then people will really start paying attention and rethinking the affordability purchase and you might find some borrowers coming to the sidelines."

CNNMoney (New York) First published on April 24, 2018: 12:37 pm ET

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