One concern is that few first-time buyers, who are critical to a sustainable housing recovery, are entering the market. They made up only 30 percent of sales in February. That's well below the 40 percent typical in a healthy market.
Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would-be buyers unable to qualify for super-low mortgage rates. First-time buyers have been hit particularly hard by the changes.
The average rate on the 30-year fixed mortgage dropped in November to 3.31 percent, the lowest on records dating back to 1971, and they have remained near that record low this year. This week the rate on the 30-year loan was 3.54 percent.
Rising demand and short supplies have encouraged builders to boost construction. U.S. builders started more houses and apartments in February and received building permits for future construction at the fastest pace in 4½ years.
The increases meant that builders broke ground on homes last month at a seasonally adjusted annual rate of 910,000, the second fastest pace since June 2008. Applications for building permits rose 4.6 percent to 946,000, the highest level since June 2008