A gauge of US home prices rose to a 31-month high in January.

The S&P CoreLogic Case-Shiller national home-price index climbed 5.9%, not seasonally adjusted, according to a monthly report published Tuesday. The highest price increases were again recorded in the red-hot markets of Seattle, Portland and Denver.

“The recent action by the Federal Reserve raising the target for the fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future,” said S&P Dow Jones Indices’ David Blitzer.

“Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become concern.” The Fed has signalled it could raise rates at least two more times.

Tight housing supplies and strong demand from buyers amid low interest rates have contributed to the rise in house prices.

But this appreciation is happening at a faster pace than wage growth and is already a burden for some prospective buyers. At the same time, high prices are preventing some existing home owners from buying larger houses. A combination of these factors could eventually impact demand so much that home prices cool, but the market is not there yet, Blitzer said.

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