"It is no longer just the investors who are taking advantage of high affordability conditions," said Lawrence Yun, the chief economist at NAR. "A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices."

"The general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller's market," Yun added.

The national median existing-home price for all housing types jumped 10.1% to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1% annual improvement.

"A diminishing share of foreclosed property sales is helping home values," said Yun. "Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions." He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. "We expect stronger price increases in most of these areas."

London's FTSE rose 1.9%, and the DAX in Germany advanced 1.8%.

The Hang Seng Index in Hong Kong settled up 0.6% and Japan's Nikkei average closed up 1.1%.

Earlier, Fitch downgraded Japan's sovereign-credit rating, pointing to its mounting public debt and slow response to stemming the debt load.

Fitch cut Japan's long-term foreign currency rating to A+ from AA, and lowered the country's local currency ratings to A+ from AA-. Both were reduced with a negative outlook.

In other news on Japan, the Organization for Economic Cooperation and Development said in an economic outlook report that it predicts the country's gross domestic product will expand by 2% in 2012 and 1.5% in 2013.

However, the Paris-based think tank forecasts that eurozone gross domestic product will shrink by 0.1% this year after previously calling for growth of 0.2%.

"The crisis in the eurozone remains the single biggest downside risk facing the global outlook," said Pier Carlo Padoan, chief economist at the OECD. He said that the eurozone could spiral towards a 2% economic contraction this year.

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