An index of home prices in the largest American cities rose in September, indicating that low supply and increased demand continue to boost housing.
The Standard & Poor’s/Case-Shiller home price index for the 20 largest metropolitan areas in the country rose 0.3% from August and 3.0% from September 2011. It was the sixth consecutive month-over-month increase and the fourth consecutive year-over-year bump.
Nineteen areas tracked by the index posted gains over August and 17 posted year-over-year increases. Leading the home price recovery in major metro areas is Phoenix, one of the places that saw some of the steepest declines during the bust. It posted a 1.8% gain from August, and its 20.4% increase from September 2011 was the biggest year-over-year gain among the 20 areas.
California cities also recovered over the prior month with Los Angeles up 1.0%, San Diego up 1.4% and San Francisco up 0.5%.
“With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.
The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable gauge of home values. It compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house’s sale price over time.
The index is a moving average of home sales combining three months’ worth of data, so September’s figures are a combination of price performance in July, August and September. As the traditionally slower fall and winter seasons begin, economists say the index is likely to post milder gains or decrease again.