U.S. home prices rose more than expected during January

U.S. home prices rose more than expected during January from a year earlier, the biggest increase since the summer of 2006, according to Standard & Poor's Case-Shiller home-price indexes.

During January, the Case-Shiller index of 10 major metropolitan areas was up 0.2% and the 20-city index increased 0.1% from December. However, on a seasonally adjusted basis, the indexes both rose 1%.

On a year-on-year basis, the 10-city index grew 7.3%. The 20-city index improved 8.1%, above recent expectations of economists polled by Thomson Reuters for an increase of 7.9%.

Low mortgage rates, a reduction in foreclosures and a shrinking inventory of homes on the market--along with an improving economy--have been supporting a gradual housing-market recovery.

Still, the two indexes remain off 29% to 30% from their June/July 2006 peaks through January.

On a year-on-year basis, 20 cities recorded growth in home prices, with eight posting double-digit increases on a percentage basis. All the cities in the index except Detroit recorded a stronger pace of year-on-year price increases for the month. Meanwhile, New York-area home prices turned slightly higher, up 0.6%, after declining for 28 consecutive months.

Markets that were hard hit by the housing bust have been among those with the strongest growth lately. During January, Phoenix posted the biggest increase, at 23%. Las Vegas home prices were up 15%.

Though closely followed by economists and the markets, the Case-Shiller index is a lagging indicator of values--a moving average now two months old.