Home prices up sharply in U.S. cities in May, Case-Shiller index says

Home prices shot up in America’s largest cities in May, according to a closely watched home price index.

The Standard & Poor’s/Case-Shiller index of 20 large U.S. cities, released Tuesday, rose 2.4% from April and 12.2% from May 2012.

San Francisco saw the largest year-over-year increase as prices jumped 24.5%. Las Vegas and Phoenix saw the next largest gains with prices rising 23.3% and 20.6%, respectiviely. In Los Angeles, prices rose 19.2%.

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“Home prices continue to strengthen,” David M. Blitzer, chairman of the index committee at S&P; Dow Jones Indices, said in a statement. Dallas and Denver “set new highs, surpassing their precrisis levels and five cities -- Atlanta, Chicago, San Diego, San Francisco and Seattle -- posted monthly gains of over three percent, also a first time event.”

Low mortgage rates, tight inventory and heavy investor demand have sent home prices sharply higher this year, providing an economic lift but also sparking concerns that some markets are becoming overheated.

Home price increases, city by city

All cities tracked by the index saw gains from April to May as well as over the year. Average U.S. home prices have returned to their spring 2004 level, according to the widely followed index.

The index, created by economists Karl E. Case and Robert J. Shiller, is one of the most widely followed gauges of home values. The housing index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house’s price over time.

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