Home prices remain on the rise

U.S. home prices remain on the upswing at the start of 2014, as a slow recovery from the bust that led to the financial crisis continues.

In the first three months, prices rose 10.3% on an annual basis, according to the S&P/Case-Shiller report. In March, an index of 20 large housing markets gained 12.4% year-over-year.

The year-over-year gains are likely to moderate, according to Stan Humphries, chief economist for Zillow, because current prices are being compared with months when many markets were at or near their post-bust bottoms. Coming comparisons will be against less depressed prices.

There are several other factors that continue to boost prices, however, including unusually low mortgage rates and the diminishing number of foreclosures and short sales on the market, which tend to sell for less. Those factors will take time to disappear.

"We're still several years away from a housing market driven purely by fundamentals like income growth and rising household formations," said Humphries.

Prices remain about 18% below their peak, which was reached in the summer of 2006.

Trends in the housing market have been mixed, with a bounce back for housing starts in April and better new home sales. Buyers have been able to take advantage of very low mortgage interest rates, but tight loan underwriting still keeps many potential homebuyers out of the market.

posted on CNN Money 5/27/14