No Trouble from Bubble.(home pricing)

So far this year, home prices nationwide continue to rise at a pace faster than economists had estimated. And the good news is that few of them see evidence of a widespread home price bubble - for the moment.

Data compiled by a government regulatory agency and by Freddie Mac both indicate that in the second quarter, home prices nationally increased at a rate not seen since the 1970s, outpacing expectations that price appreciation would slow down this year.

Freddie Mac's quarterly home price index rose 10% on an annualized basis in the second quarter. Freddie Mac deputy chief economist Amy Crews Cutts attributed the strong price increases to nearly record low interest rates in March, which helped fuel strong housing demand.

All regions of the country posted an increase in the second quarter, with the strongest price gains being notched up on the West Coast.

In a company news release, she noted that fast gains in house prices lead to the question of whether or not these gains are sustainable. Thus far, she said annual price growth is consistent with the market fundamentals of declining interest rates, a shortage of land suitable for building, and the strength of consumer spending.

"That said, anyone thinking about investing in a house should probably consider whether it would still be a good investment if the value only increased at one-third or one-half of the rates we've seen recently. I don't think home values will come down, but their rate of growth will likely slow back closer to average levels over the next year or so," Ms. Crews Cutts said.

The Office of Federal Housing Enterprise Oversight also found that home prices increased at the fastest rate since 1979, increasing 9.36% between the second quarter of 2003 and the second quarter of 2004.