House prices had their biggest jump in years in the second quarter of 2012, mainly because of a big shortage of houses for sale, reports the Wall Street Journal. Officials from data firm CoreLogic say it was the biggest jump since 2005, while Freddie Mac, using different methodology, says the 4.8% quarter-on-quarter rise was the biggest since 2004. The number of homes for sale is down sharply from a year ago, largely because of investors snapping up cheap homes to turn into rentals, while the lowest mortgage rates in 60 years have fueled a surge in demand.
The long slowdown in new home construction has added to the home shortage, as has the fact that more than 11 million homeowners are "underwater," owing the bank more than their homes are worth. In these conditions, "only a little bit of the market is tradable because you have so much negative equity," the chief economist at real-estate firm Zillow says. "You have very few people willing to sell homes, and a big uptick in demand can create some real price appreciation." But if investors keep on buying distressed homes, some analysts believe that will build momentum that will bring in more ordinary buyers and sellers. (Read more housing market stories.)