US home prices post best yearly gain since 2006

Prices of U.S. single-family homes rose in January at the fastest annual pace since mid-2006, just before the housing boom collapsed, in a new sign that the housing recovery is strengthening ahead of the spring buying season. The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas gained 1 percent in January and was up 8.1 percent from a year earlier. Both increases were more than analysts expected. Home prices rose in all 20 cities over the past 12 months, with eight markets posting gains above 10 percent. Prices rose in 11 of the 20 cities in January compared to the previous month. The S&P/Case-Shiller index covers about half of U.S. homes. The increase in home prices over the past year brings the average back to their autumn 2003 levels, though they are still down nearly 30 percent from the peak seen in early 2006. Still, steady price increases should help make the housing recovery sustainable and add to economic growth. Higher home prices encourage more people to buy before prices rise further.