(NEW YORK) — Roughly 15 years after a housing bubble triggered the worst U.S. financial disaster since the Great Depression, some observers are voicing concern that the industry has fallen into another bubble.

Home prices are soaring, despite high mortgage rates that in theory should crimp demand and push down prices.

The share of U.S. homeowners under serious financial strain, meanwhile, jumped slightly at the outset of this year when compared with the final months of 2023, real estate data-firm ATTOM found in a report this week.

Despite these trends, experts who spoke with ABC News largely rejected fears of a housing bubble.

The frothy prices and the strain they place on prospective homebuyers are a cause for concern, they said, but the price hikes owe to an old-fashioned imbalance between supply and demand rather than the frenzied speculation characteristic of a bubble.

“The price increases have been quite remarkable but there aren’t abnormal factors driving them,” Lawrence Yun, chief economist at the National Association of Realtors, told ABC News. “It’s simply supply and demand — the normal reason.”

Two years ago, the Federal Reserve began an aggressive series of interest rate hikes in an effort to rein in inflation. Typically, such a policy would send mortgage rates higher and drive home prices downward as homebuyers wither under steep borrowing costs. In this case, the mortgage rates soared but prices skyrocketed alongside them.

For nine consecutive months, year-over-year existing-home prices have climbed, according to data released by the National Association of Realtors in March. Going back further, the median price of an existing home has jumped nearly 40% over the past four years, NAR data shows.

“It’s a strange market that seems like an anomaly,” Marc Norman, associate dean at the New York University School of Professional Studies and Schack Institute of Real Estate, told ABC News. “I can certainly see people wondering if it’s a bubble.”

The hot prices, however, stem from a straightforward instance of too much money chasing too few homes, experts told ABC News.

During the Covid-19 pandemic, homebuilding slowed when shortages of materials and workers made input costs more expensive, Norman said. Right as the supply blockages began to fade, the Fed raised interest rates, making it more expensive for developers to borrow the money required to launch projects.

The cooldown of housing construction has contributed to a dearth of homes. Housing supply stands 3.2 million homes short of the amount needed to meet demand, real estate and investment firm Hines said in a report last month.

“We haven’t built enough houses in this country and there’s still a lot of demand,” Christopher Mayer, a real estate professor at the Columbia University Business School, told ABC News. “The interest rates have made it more expensive to build and homes have gotten more costly.”

The current housing shortage contrasts sharply with the housing bubble that led to the Great Recession, experts said.

Back then, a sharp rise in prices drove a surge of homebuilding, which fueled an oversupply of housing. The abundance of homes, in turn, drove buyers to scoop up a property — or multiple properties — as appreciating assets rather than places to live. When new buyers couldn’t be found and the music stopped, prices crashed.

Prices stand unusually high in the current market but the shortage of housing places a limit on how far they can fall, since the lack of options for buyers will continue to push upward on prices, Ken Johnson, a real estate economist at Florida Atlantic University, told ABC News.

“I don’t see a dramatic crash,” Johnson said, adding that he expects a scenario in the coming months in which home prices plateau or dip slightly as they test the limits of consumers’ budgets. “On a scale of one to ten, with the last bubble being a nine, this is a two or three.”

Still, Johnson said, potential interest rate cuts could heat up the housing market even further, sending prices skyward and further threatening the stability of the sector.

On the other hand, Yun raised the possibility of a recession that forces layoffs and compromises the capacity for homeowners to afford their mortgages, potentially flooding the market with homes. Even in such circumstances, he said, “home price decline would be fairly modest.”

Even in the absence of a full-on bubble, the market could use some deflation, Norman said.

“The bigger problem to me than a bubble is just the lack of affordability,” he added. “Maybe the bubble doesn’t burst but some air gets let out of the balloon.”

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