Home prices rise at strongest pace in nearly 3 years

SOURCE S&P Dow Jones Indices and CoreLogic

Credit: KARL GELLES, USA TODAY

Paul Davidson , USA TODAY Published 10:53 a.m. ET May 30, 2017 | Updated 8:36 a.m. ET May 31, 2017

These are heady days for American home sellers, with a report Tuesday showing that housing prices in March recorded their largest annual increase in nearly three years.

But the gains are inflicting more financial pain on home buyers, though the price run-up has fallen well short of the annual double-digit increases during the mid-2000s housing bubble. 

Home prices across the U.S. were up 5.8% annually in March, up from 5.7% the prior month, according to the S&P CoreLogic Case-Shiller national index.Driving the increase were a longstanding shortage of both new and existing homes combined with steady job and income growth that's prompting more Americans to buy houses for the first time or trade up. 

The pace of price gains has accelerated in 2017 after year-over-year increases held fairly steady at a healthy 5% or so from 2014 to 2016.

“Home buyer demand is sky high, inventory levels are near rock-bottom and home prices keep rising,” says Svenda Gudell, chief economist of real estate research firm Zillow.