While homes are certainly selling faster, double digit price gains are not considered healthy, especially when wage growth is nowhere near that. At some point buyers will hit the wall, unable to afford the homes they want.
(Read More: US Home Sales Rise to Highest Level in More Than 3 Years)
First time home buyers are already dropping out of the market, representing just twenty-nine percent of home buyers in April, according to the NAR—the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly twenty-five percent from a year ago, according to a new report from Lender Processing Services.
Just eighteen percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to thirty-five percent about a year and a half ago. Sales of homes priced below $100,000 were down ten percent in April compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations.
(Read More: Mortgage Applications Sink as Interest Rates Jump)
"I don't see it lasting," added Fairweather. "I think the minute they increase interest rates, you'll see people pull back."
—By CNBC's Diana Olick; Follow her on Twitter
@Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC
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