He notes that given that June is one of the peak buying months, strong gains should be expected. But housing gains in coming months should be tempered, particularly with mortgage interest rates rising.
The housing recovery began last year as foreclosures plunged and buyers chased deals on homes and mortgages. Investors of all stripes—from small syndicates of wealthy individuals to large Wall Street players—have played a huge role in the housing recovery, snapping up many of the cheapest homes to flip or to rent out.
Many experts believe that home prices can’t continue to shoot up at this pace for long without accompanying growth in jobs and wages. Rising interest rates and relatively tight access to mortgage credit could put a check on runaway prices.
“When interest rates start rising and housing prices start rising, we will get to the point where both have risen enough so they are no longer attractive,” says Anthony Sanders, a professor of real estate finance at George Mason University in Virginia. “We are probably going to see the market cool down quite a bit.”