U.S. home prices jumped 12.1 percent in April from a year ago, the most since March 2006. More buyers and a limited supply of available homes have lifted prices in most cities across the country, a sign of a broad-based housing recovery.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday also rose 2.5 percent in April from March, the biggest month-over-month gain on records dating back to 2000.
All cities except Detroit posted gains in April from March. That's up from only 15 cities in the previous month.
Prices rose from a year earlier in all 20 cities for the fourth straight month. Twelve cities posted double-digit gains. San Francisco, Las Vegas, Phoenix and Atlanta all had price increases over the past year of more than 20 percent, while Detroit and Los Angeles showed gains of nearly that much. Minneapolis posted a 15 percent gain.
The housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some of the drag from higher taxes and federal spending cuts. Steady job gains and low mortgage rates have encouraged more people to buy homes.
David Blitzer, chairman of the index committee, said the housing recovery should continue even with mortgage rates rising. Borrowing rates have jumped after Federal Reserve Chairman Ben Bernanke said last week that the Fed could slow its bond-purchase program, which is intended to keep long-term interest rates low.
"Home buyers have survived rising mortgage rates in the past," Blitzer said, "often by shifting from fixed rate to adjustable rate loans."
Blitzer said the bigger issue for the housing market is banks' willingness to lend. A recent survey by the Fed suggested some banks are easing credit standards.
Still, Stan Humphries, chief economist at real estate data provider Zillow, said rising rates and an increase in the number of sellers should temper price gains in the coming months.
"The national housing recovery is strong and sustainable, but pockets of volatility will emerge," he said. "Buyers expecting home values to continue rising at this pace indefinitely may be in for a shock."
The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.
Prices are rising because demand is up and fewer homes are available for sale. That's made builders more optimistic about their prospects, leading to more construction and jobs.
A measure of homebuilders' confidence rose sharply in June to its highest level in more than seven years.
In May, sales of previously occupied homes jumped 4.2 percent to surpass the 5 million mark, the National Association of Realtors said last week. That's the first time that's happened in 3½ years.
Excluding two months in 2009 when a home-buying tax credit spiked sales, home sales hadn't topped 5 million since July 2007.