May 28 (Reuters) - Recent gains in U.S. home prices are coming too fast in some areas, particularly California, and could stall or reverse, Fitch Ratings said on Tuesday.
California has seen price increases of 13 percent over the last year, Fitch said.
In Los Angeles, for example, prices are up more than 10 percent in the past year despite a jobless rate that remains above 10 percent and real incomes that have declined over the past two years.
U.S. home prices accelerated in March by the most in nearly seven years, according to data released on Tuesday. .
The S&P/Case Shiller composite index of 20 metropolitan areas climbed 10.9 percent year over year, beating expectations for 10.2 percent. This was the biggest increase since April 2006, just before prices peaked in the summer of that year.
Home prices in Phoenix continued their sharp ascent, rising 22.5 percent from a year earlier. Other standouts included San Francisco, up 22.2 percent, and hard-hit Las Vegas, up 20.6 percent.
Restricted supply and heightened demand are raising bidding prices, Fitch analysts said in a statement.
“The demand is artificially high as borrowers remain on the side lines waiting for prices to stabilize,” they wrote. “We believe this level of housing demand is likely to abate once the pent-up demand is satisfied.”
The supply-demand imbalance is even more pronounced in regions with strong institutional and retail bids for rental properties, Fitch said.
That sector has attracted an estimated $8 billion to $10 billion of new capital, Fitch said, with a large number of buyers vying for a limited number of homes in many markets.