NEW YORK (
) -- Home prices set a record monthly rise in April as more buyers chased fewer homes.
The widely-followed Case Shiller 20-City Home Price Index rose 1.7% in April on a monthly adjusted basis, beating consensus expectations for a 1.5% gain. On a non-seasonally adjusted basis, the index rose 2.5%. Year-over-year, the 20-City Composite jumped 12.1%, the largest year-over-year gain in seven years.
The index has reported positive year-over-year gains for the past four months. The 20-City Composite reported a monthly adjusted gain of 1.4% in March and a 12-month gain of 10.9%.
Atlanta, Las Vegas, Phoenix and San Francisco posted year-over-year gains of over 20% in April, with San Francisco reporting the highest gain at 23.9%. Phoenix has posted 12 consecutive months of double-digit gains.
While the strongest gains are being recorded in the cities most hurt by the housing bust, it is worth noting that home prices in Texas and Colorado are now at new highs.
Average home prices are now back at early 2004 levels, though the index is still about 25% below 2006 peak levels.
The strong housing report comes at a time when doubts have resurfaced about the sustainability of the housing recovery. Interest rates have rapidly risen from their lows -- the 30-year fixed mortgage rate is currently at 4.50%, up from 4.11% a week ago --, raising concerns it will hurt affordability.
But David Blitzer of S&P believes those concerns might be overdone. "Home buyers have survived rising mortgage rates in the past, often by shifting from fixed rate to adjustable rate loans," he said in a statement. " In the housing boom, bust and recovery, banks' credit quality standards were more important than the level of mortgage rates. The most recent Fed Senior Loan Officer Opinion Survey shows that some banks are easing credit restrictions. Given this, the recovery should continue."
-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.