WASHINGTON -- Home prices rose in May from April in every city tracked by a leading index, a sign that increasing sales and tight inventories are supporting a modest housing recovery.
The Standard & Poor's/Case-Shiller home price index released Tuesday showed increases in all of the 20 cities tracked. And a measure of national prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings.
Chicago, Atlanta and San Francisco posted the biggest monthly increases. Detroit, San Diego and Charlotte posted the smallest gains.
Phoenix, one of the hardest-hit cities in the housing slump, posted the strongest year-over-year gain in home prices. Still, prices there remain more than 50 percent below their peak, reached in summer 2006.
The increases partly reflect the impact of seasonal buying. The month-to-month prices aren't adjusted for seasonal factors.
In the past year, the 20-city price index has dropped 0.7 percent, the smallest decline since September 2010. That's much lower than the 1.8 percent year-over-year decline in April.
Many economists were encouraged by the widespread nature of the increases.
"The fact that most regions ... have seen gains in recent months is a positive sign that the gradual improvement in housing conditions is becoming broader based," Peter Newland, an economist at Barclays Capital, said in a note to clients.
David Blitzer, chairman of the S&P's index committee, cautioned that the trend would need to continue into the summer and fall to ensure that it isn't just a reflection of strong springtime and early summer sales.
"The housing market seems to be stabilizing, but we are definitely in wait and see mode for the next few months," he said.
Economists also said that prices may be higher because foreclosures are making up a smaller share of home sales.
The S&P/Case-Shiller monthly 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 May figures are the latest available.
The housing market is recovering, but at a slow and uneven pace. Sales of new homes fell in June after reaching a two-year high in May. Sales of previously occupied homes also fell last month, but were higher than a year ago.
Builders are getting more confident, partly because they are seeing more interest from potential buyers. Builders broke ground in June on the most new homes and apartments in four years.
Even with the gains, the index is 33 percent below its peak reached in the summer of 2006, at the height of the housing boom. Based on the 20-city index, home prices are now at about the same level as in early 2003.
The supply of homes for sale remains very low, which has helped stabilize prices. At the current sales pace, it would take six and a half months to exhaust the supply of previously-occupied homes. That's just above the six months economists consider healthy.
There were 144,000 new homes for sale in June, only slightly higher than the 143,000 in May, which was the lowest supply on records dating back to 1963.
Despite the modest gains in housing, the broader economy has weakened in recent months. Employers have added an average of only 75,000 jobs a month in the April-June quarter. That's much lower than the average of 226,000 added in the first three months of this year.
Housing added to economic growth in the second quarter, but the sector isn't large enough to make a big difference. The economy expanded at only a 1.5 percent annual rate in April-June, below the first quarter's 2 percent pace. Both readings are much lower than the fourth quarter's 4.1 percent growth.