(Stock prices added.)

NEW YORK (

TheStreet

) -- The housing market may have finally received a real signal that it's made a turn for the better.

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Second-quarter home prices rose 3% compared with the prior period, their first sequential gain in three years, according to the Standard & Poors/Case Shiller's U.S. National Home Price Index.

Seeing the Forest Through the Trees

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The news sent shares of homebuilders rallying in morning trading.

KB Home

(KBH) - Get Report

jumped 5% to $18.33,

Lennar

(LEN) - Get Report

rose 5% to $15.26,

Toll Brothers

(TOL) - Get Report

grew 4% to $22.56 and

Pulte Homes

(PHM) - Get Report

climbed 5% to $13.22.

But this doesn't mean the recovery will be instantaneous, of course. Prices were still down 15% from the second quarter of 2008. And, to put it in further perspective, the national housing gauge remained at levels not seen since early 2003.

The hardest hit cities, especially those in the Sun Belt, continue to show weakness, with 15 out of the 20 cities reporting double-digit annual declines.

-Reported by Jeanine Poggi in New York.

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