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(latimes.com) Home prices are soaring at a pace not seen since the housing boom, giving a much-needed boost to the larger economy. The rebound is helping homeowners recover losses from the crash and giving them confidence to spend. And that's raising the fortunes of banks, builders and investors — all reflected in a Tuesday rally on Wall Street.

Home prices rose 10.9% in March compared with the same month last year, according to the Standard & Poor's/Case-Shiller index of 20 U.S. cities. Fueled by strong demand and tight supply, that was the strongest annual jump since April 2006.

The real estate market has emerged once again as the driver of economic optimism, sorely needed to pick up the slack left by weak government spending, economists said.

Home prices will keep accelerating this year and next year because of home shortages, said economist Patrick Newport of IHS Global Insight. But he advised caution in joining the fray of home buyers.

"Whenever you see double-digit increases, human psychology starts kicking in," Newport said, which could cause some markets to overheat and risk another price crash.

Read more here: Home price gains propel U.S. stocks