Prices took an unexpectedly big leap upward in April as rising demand collided with tight supplies to propel sale prices.

With headlines like The Re-Explosion of U.S. House Prices Is Over, most forecasts in January had prices rising 4-5 percent over 2014.  Only the CoreLogic and NAR were on the sunny side, predicting 5/9 and 6 percent respectively.

Only four months into the year and prices are blowing the predictions away.

NAR’s medium April; existing home price is 8.9 percent above a year ago.  RE/Max reports a median sales price 7.1 percent above the price in April 2014.  CoreLogic reported 5.9 percent in April. .  Realtor.com was up 8.2 percent over 2014.  Redfin was up 6.7 percent.  In California, CAR reported April prices were 11.6 percent higher than a year ago.  Zillow reporte reporting a 3 percent RealtyTrac’s March increase was 8 percent.  Only increase over the past year.

The April surprise was a result of several factors.  Probably the least important was the continuing disappearance of distress sales, whose discounted prices have a negative impact on prices.  . Active foreclosures were down to 7.3 percent of homes sold in the first quarters and REOS accounted for only 7.2 percent of sales.

More important are inventories, which have been understrength through March but are improving as sellers respond to rising prices.  NAR reported that total housing inventory, which peaked just over 4 million during the heyday of the housing boom, has declined steadily since then. In February, existing home inventory reach 1.89 million, up a marginal 1.6 percent over January, but also down 0.53 percent over the same period a year ago. The current home inventory is almost at par with pre-recession levels.

Finally, there is demand.  Things are looking better on that front, but demand alone is not yet strong enough to drive such a rally.  However, first-time buyers have returned to the 30 percent market share they enjoyed last year but are still far below their traditional 40 percent level.  MBA reports purchase applications are 20 percent from a year ago.  A lot of barriers, ranging from the economy to lending standards, are still keeping potential owners in their apartments.

Perhaps RE/Max’s Dave Liniger summed it up best.   “The spring selling season has gotten off to a very strong start. We saw a significant jump in sales in March, and now April has pushed even higher. With an improving economy and continuing low interest rates, potential buyers are motivated to enter the market. These conditions, along with rising prices are also encouraging sellers.”