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Jun 28, 11:15 AM EDT

With the supply of homes slight, US prices surged in April


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AP Photo/Elise Amendola

WASHINGTON (AP) -- U.S. home prices scaled new heights in April, with seven cities - Boston, Charlotte, Dallas, Denver, San Francisco, Seattle and Portland, Oregon - setting highs.

The Standard & Poor's/Case-Shiller 20-city home price index rose 5.4 percent in April compared with a year earlier, just below the 5.5 percent year-over-year gain posted in March.

Home values are now just 9.6 percent below their peak set nearly a decade ago, according to the report released Tuesday.

A shrinking supply of homes for sale has intensified competition from buyers and forced up prices. Demand has been further fueled by a healthy job market and historically low mortgage rates, which have made people more comfortable about paying higher home prices.

The number of listings has fallen 5.7 percent from a year ago, the National Association of Realtors said last week.

Home prices rose in all 20 major housing markets, with double-digit annual increases in Portland and Seattle.

"While strong price growth in these markets should help increase inventory in the coming months, homes will be significantly less affordable for homebuyers than this time last year," predicted Ralph McLaughlin, chief economist at the online real estate service Trulia.

Overall home ownership rates have dropped near a 48-year low in the aftermath of the housing bust that began in 2007. But sales have improved as the broader economy has slowly healed.

Sales of existing homes improved 1.8 percent last month to a seasonally adjusted annual rate of 5.53 million, according to the Realtors. It was the best pace since February 2007.

The foundation for much of that growth has been a low 4.7 percent unemployment rate, which reflects a stable period for workers. Rising prices have also been tempered by ultra-low mortgage rates, which have held monthly loan payments in check.

Mortgage buyer Freddie Mac said the 30-year fixed-rate mortgage averaged 3.56 percent last week - down from 4.02 percent a year ago and well below the long-term average of 6 percent.

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