A closely monitored study of sales activity in 20 U.S. cities revealed home prices rose by 8.1 percent in January on a year-over-year basis, which is the biggest such increase in prices since June 2006.
The S&P Case-Shiller index showed home prices rose across all cities monitored by the study in January. Phoenix led the way with a 23 percent increase and several other cities saw prices surge by double-digit percentage points, including Los Angeles. A CNNMoney report on the study noted cities that were particularly hard hit when the previous housing bubble burst are now leading the recovery.
Several factors have helped to spur the growth in home prices. Most notable of these are the current favorable buying conditions, which includes historically-low mortgage rates; a low inventory of available homes; a drop in foreclosures and an improving overall economy.
Analysts remain encouraged by the current direction of the housing market.
“The market still has a long way to go nationally, but the healing process—and a return to a normalized housing market—is definitely underway,” Jim Baird, chief investment officer for Plante Moran Financial Advisors told CNN Money.
To illustrate the point of the market still having a long way to go, CNNMoney noted the S&P Case-Shiller index remains 28.6 percent below its 2006 peak.
In another study released this week, the Commerce Department revealed the sales of new homes slowed slightly in February from the previous month, but was still up a healthy 12 percent from February 2012. Analysts cited bad weather in February as a potential reason for the slowdown. However, they stressed market fundamentals remain strong and home sales are expected to accelerate even faster in the coming months.