House prices increased 12.4 percent, the most since February 2006

house prices rose 12.4 percent in July from a year ago, the most since February 2006. An increase in sales on a limited supply of available homes has led the gains. The Standard & Poor's / Case- Shiller 20 city home price index reported Tuesday has improved since June, when it rose 12.1 percent from a year ago. And all the 20 cities have posted gains in July from the previous month and from a year ago. Yet , the prices month -on-month earnings were reduced in 15 cities in July from the previous month , prices indicate may be peaking . Stan Humphries , chief economist for real estate data provider Zillow , said home price is expected to continue to grow, but at a slower pace. 

Mortgage rates have risen by more than a percentage point from May . And most homes are under construction. This should alleviate the supply problems that have inflated prices in some markets. "This moderation in place is good for the global market ," said Humphries . House prices rose 27.5 percent in Las Vegas from a year earlier , the biggest gain . 24.8 percent jump in San Francisco was the second largest and the biggest annual return for that city since March 2001. The index covers about half of American homes . It measures prices compared with those in January 2000 and creates a three-month moving average . The July figures are the latest available . They are not adjusted for seasonal variations , so the monthly gains reflect more buying activity during the summer. 

Since bottoming out in March 2012, home prices have rebounded about 21 percent. There remain about 22 percent below the peak reached in July 2006. The real estate market is picking up in the past year , helped by steady growth of jobs , low mortgage rates and relatively low prices. Sales of previously occupied homes rose in August to a seasonally adjusted 5.5 million annual pace , according to the National Association of Realtors. This is a healthy level and the highest in more than six years. But the group of real estate agents ' warned that the pace may be a temporary spike in August .

The gain reflects closures and largely occurred because many buyers rushed to lock mortgage rates in June and July, before further increased . Real estate agents have said buyer traffic has come down significantly in the month of August, probably reflects the higher rates . The average rate on a 30 year fixed mortgage was 4.5 percent last week. Which is close to a high of two years. It 's still at historically low levels . Increased rates in May after Chairman Ben Bernanke suggested the Fed could slow down its program of bond purchases by the end of the year. 

But the Fed surprised markets last week by deciding against the reduction of $ 85 - billion - a - month bond purchases , which have kept interest rates low in the long term . The Fed said that one of the main reasons for his decision was the sharp rise in mortgage rates and other interest rates. The decision by the Fed could temporarily loosen rates , although many economists expect the Fed will eventually slow down purchases , perhaps as early as December . Rates would probably go up after that .