Case Shiller Home Price Index Summary for September by USA Today

Home prices are up 3% year over year, according to a widely followed index index out Tuesday, adding to evidence of a strengthening housing recovery.  The Standard & Poor’s Case-Shiller index of 20 major cities rose 0.3% in September from a month earlier, marking the sixth consecutive month of increases.  Prices rose in 13 cities, declined in five and were unchanged in two in September compared to the prior month, according to the index.

“With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market,” said David Blitzer, chairman of the home price index committee.

Phoenix has been leading the recovery with a 20% year-over-year gain. And prices in Atlanta prices finally rose 0.1% year over year in September, after 26 straight months of declines.

Prices in Chicago and New York fell 1.5% and 2.3%, respectively, year over year .

Case-Shiller’s index rose 3.6% in the third quarter from the same time a year ago. And, year over year, prices rose in 17 of the 20 cities tracked by the index.

Federal Reserve Chairman Ben Bernanke, in a recent speech, noted housing market improvements in much of the country, but added that the market is not “out of the woods” yet, given still tight credit conditions that make it hard for home buyers to qualify for mortgages.

Low interest rates, which dipped last week to a record low national average of 3.31% for a 30-year fixed mortgage, are helping, economists say.

And while the housing market has a ways to go before it returns to what economists consider healthy levels, several recent home price reports showed the same kinds of gains in September as Case-Shiller reported.

Mortgage tracker Lender Processing Services also recently said prices up 3.6% year over year. Research firm CoreLogic reported home prices up 5% in September year over year for the biggest gain since July 2006.

Home price increases are being driven by increasing demand, a shrinking inventory of homes for sale and fewer foreclosed properties, which tend to sell at a discount to others.