The market’s been pretty hot, by which I mean, demand seems to be
outstripping supply. I base this statement on the below chart, which
shows that while months of inventory is higher than it was during
the spring 2013 feeding frenzy, it is lower than this time last
year:

…and, it’s among the lowest we’ve seen recently outside said
feeding frenzy:

I’ve been discussing the plunge in months of inventory for a while,
and surmising that this would put upward pressure on prices, as
there is typically an inverse correlation between months of
inventory and monthly price changes:

And sure enough, prices have jumped in recent months, after going
nowhere for the better part of a year:

Months of inventory remains low, so I’d expect this to continue for
as long as this remains the case.  However, I think there is a
good chance that the recent surge in rates (which are still quite
low on an absolute level, but higher than earlier this year) will
somewhat reduce demand and thus upward price pressure, to at least
some degree.  Still, all in all, price pressure appears to be
to the upside. 

To be clear, this says nothing about what is a sustainable or
reasonable level of home prices for the long term.  I am just
talking about near-term supply and demand pressures, which have been
and still seem to be conducive to rising prices.  (As for the
sustainable/reasonable level of prices, this is best determined by
comparing home prices to the underlying fundamentals… I’ll be
updating that stuff soon, but it hasn’t changed dramatically since
the last go-around).

More graphs below, for the bored among you.