An index of home prices edged up in July, adding to evidence of revival in the long-ailing US housing market.
Analysts say the shift, after many months of falling prices, is driven by several forces: an improving economic outlook, low mortgage rates, and homes that have become more affordable due to price drops.
Although the road ahead for real estate may remain bumpy, the trends could help hard-hit markets work through high inventories of unsold homes.
“We continue to project modest increases in home sales over the course of the year in response to high levels of affordability, investors and first-time buyers taking advantage of distressed sales, improving demographics, and a pickup in the economy," writes David Berson, chief economist at PMI Mortgage Insurance in Walnut Creek, Calif.
But even if the numbers vary, the FHFA news comes as rival indexes also show signs of welcome stability.
US home prices were down 4.2 percent in the past year, according to the FHFA index, and down 10.5 percent from their peak in early 2007.
Although reporting a gain in July, the agency revised downward the gain for June from 0.5 percent to 0.1 percent. In May the index rose 0.6 percent.
By region, an interesting trend shows up in the FHFA data: The "great recession" is turning out to be a great equalizer of home prices. Nine regions tracked by the agency are showing smaller divergences from the national average than they did 18 months ago.
Back in Febuary 2008, five of the nine regions had home price indexes that, when tracked from a 1991 base level of 100, differed from the national average by more than 6 percent.
Now just two regions are in that category.
Overall, home prices in the US are exactly twice their 1991 levels as of July. The biggest divergence remains in the Mountain states from Montana to Arizona, where home prices are up 20 percent more than the national average since 1991.
The other notable divergence is in Midwestern industrial states where home price gains since 1991 have been 10 percent smaller than the national average. But in both those regions, the gap is narrower now than it was a year and half ago.
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