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Aug 25, 9:57 AM EDT

US home prices rise steadily in June as sales pick up


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WASHINGTON (AP) -- U.S. home prices rose solidly in June, another sign of health in the housing market.

The Standard & Poor's/Case-Shiller 20-city home price index rose 5 percent from a year earlier, a slight improvement on May's 4.9 percent increase, according to S&P Dow Jones Indices.

Prices rose 10.2 percent in Denver, 9.5 percent in San Francisco and 8.2 percent in Dallas. Chicago posted the smallest gain, just 1.4 percent.

Strong sales have been lifting prices. The National Association of Realtors said last week that sales of existing homes rose 2 percent in July to a seasonally adjusted annual rate of 5.59 million, the fastest pace since February 2007. The Commerce Department reported last week that U.S. builders started work on single family homes in July at the fastest pace since late December 2007, the month the Great Recession began.

"The missing piece in the housing picture has been housing starts and sales," said David Blitzer, chairman of the S&P Down Jones index committee. "These have changed for the better in the last few months."

Still, some uncertainties weigh on the housing market. The Federal Reserve is considering whether to raise short-term interest rates, a move that might send mortgage rates higher. For now, the average rate on 30-year fixed-rate mortgages remains below 4 percent. Blitzer says a modest Fed rate increase "won't derail housing."

Housing is also drawing strength from a healthy labor market. U.S. unemployment is at 5.3 percent, a seven-year low.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The June figures are the latest available.

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This story has been corrected to show that Chicago, not Washington D.C., registered the smallest annual price increase.

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