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April fooled real estate industry economists who were expecting housing starts and sales to soften. A surprise drop in interest rates helped to fuel the highest increase in housing prices nationwide in 25 years. It's still a great time to buy houses because demand isn't going away, and it's a great time to sell because buyers are lining up.

Thirty-year mortgages are at near record lows again, down a full percentage point from a year ago. Oil is throwing a slick under the wheels of the stock market, making it skid. Investors are trying real estate, especially when they can get adjustable rate, hybrid or interest-only loans as easily as they can buy stocks on margin.

If you're wondering if real estate is partying like it's 1999, oblivious to a coming crash, you're not alone. Economists are wary, but not worried yet.

"It is remarkable how mortgage rates have remained so low for so long," said Frank Nothaft, Freddie Mac's vice president and chief economist. "But as long as inflation is held in check, there is little or no pressure to push mortgage rates higher. And at the moment, despite high fuel prices, core inflation does indeed seem to be a nonevent."

A year ago, the 30-year FRM averaged 6.30 percent, when annual housing sales hit their last recorded high in April 2004 of 7.02 million. This figure alone hints that housing could still continue to boom even if interest rates were to go higher by another percentage point or two, or even three.

While sales could slow, they won't stop due to the "Fear Factor." Buyers are more afraid of not earning equity as they are losing it.

There's also the "SUV Factor." Gas-hogging car owners are finding they are suffering accelerated depreciation as well as higher gas prices – a fast-appreciating home on the coast could keep them in their V-8s.

And don't forget the new investment mantras where it's OK to blithely ignore the economic lessons of the past – you can hardly lose money on housing because of rapid appreciation. That attitude has buyers snapping up houses, leaving the nation at a 4.2-month supply. When housing supplies on hand hit six months, it is generally assumed that the market is balanced.

So it's not all that surprising that the National Association of Realtors reported that existing-home sales hit a new record high in April, 2005 of 7.18 million, and that the median price of an existing home climbed over the $200,000 mark for the first time. This is a rapid increase – up 7 percent from March of 2005 and 15 percent higher than a year ago.

David Lereah, the NAR's chief economist observes, "A new record is a bit unexpected, but so is the performance of mortgage interest rates which have been lower than forecast," he said. "When we look at recent job gains, we see all the positive factors coming together to coincide with a powerful demographic demand for housing."

Designated driver for the housing party seems to be the National Association of Home Builders (NAHB,) which recently announced an 11 percent surge in housing starts. However, this number of units only brings new units under construction to year-ago figures, which support the NAR's claim that housing inventory is tight.

"Today's housing report should dispel any further concerns of a soft patch in the economy," said David Seiders, the NAHB's chief economist. "The economy and housing market are still fundamentally solid."

But not all economists are so giddy. Federal Reserve Chairman and housing party chaperone Alan Greenspan thinks there's booze in the punch. While he stopped short of saying there was a housing bubble nationally, he did say that housing prices will "soon simmer down."

So, party and drive at your own risk, but don't stay out of the market and miss the fun.

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