The S&P/Case-Shiller index released Tuesday showed that home prices in 20 large U.S. metro areas rose 1.3 percent from July and 12.8 percent from August 2012, beating the expectations of analysts who predicted weaker price gains. Prices haven't risen this fast year-over-year since February 2006.
Still, there are signs of a cooling. The rate of monthly increases in the 20 large cities peaked in April.
"Since then, home prices continued to rise, but at a slower pace each month. This month 16 cities reported smaller gains in August compared to July. Recent increases in mortgage rates and fewer mortgage applications are two factors in these shifts," David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.
The housing recovery kicked into overdrive earlier this year as families and investors jumped into the market, finally convinced the bottom had passed. Prices shot up rapidly as people battled over a shortage of homes for sale, raising concerns that a bubble was forming in some red-hot markets.
But lately the market has cooled as investors have pulled back and as listings have increased in many areas, helped by some owners looking to cash in on those soaring values. Some buyers, meanwhile, have stepped aside, frustrated over the higher cost of houses and bidding wars. Mortgage rates, while having declined recently, are up sharply since May.
The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable read on home values. The housing index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time.
Las Vegas saw the largest annual increases, with prices soaring 29.2 percent from a year earlier.
All 20 metros saw prices rise over the month in August, although most rose at a slower pace than in July.
The Case-Shiller index tends to trail other market indicators, and more recent data has shown a sharper cooling. Americans signed fewer contracts for previously owned homes in September than any month since December, the National Association of Realtors said Monday. New home sales have also been weak, although September data has yet to be released because of the partial government shutdown.
The housing market usually cools in the fall and winter as many families choose not to make a move with their children back in school and the holidays approaching.
But most experts say larger market forces - such as higher home prices, coupled with meager income growth - have also hurt demand.