Business

Home prices on a high

The housing market is sizzling this summer.

Home prices surged 12.2 percent in May compared with last year, the biggest annual gain in seven years, according to a report from real-estate data provider CoreLogic.

In the New York area, home prices, excluding distressed sales, rose 8.3 percent year over year.

CoreLogic predicted more summer gains, including a 13.2 percent year-over-year rise for June, as steady job growth and low interest rates prompt more buyers to take the plunge.

“Inventory is very low, affordability is very high, and expectations about future home prices are turning increasingly positive,” said Michelle Meyer, senior US economist at Bank of America Merrill Lynch.

One concern is that higher mortgage rates will start to weigh on the market.

Last month, mortgage lender Freddie Mac said the average 30-year fixed mortgage rate rose to 4.07 percent in June. That’s up from 3.68 percent last year.

Analysts said while price gains will start to slow, the housing recovery will continue.

“We can expect to see prices slow down, but not go into reverse” in the next few months, said Jed Kolko, chief economist at Trulia.