NEW YORK (CNNMoney) — The pace of home prices increases continued to accelerate in February, according to a measure released Tuesday that showed the biggest gain since near the height of the housing bubble.
The S&P Case-Shiller index of home prices in 20 major markets posted a 9.3% rise over the last 12 months. That's up from the 8.1% rise in January. It's the biggest 12-month gain in the index since May 2006, which was just one month after the index showed record-high home prices.
The index showed a 12-month decline in prices almost every month over a five-year period through May 2012. But every month since then has shown a gain in home prices, and each month's gain has been stronger than the one that came before.
"Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
The housing recovery has been driven by a number of factors, including near record-low mortgage rates, a drop in foreclosures and reduced unemployment, all of which have helped lift both new-home sales as well as sales of previously owned homes. The rising home prices has helped bring back some buyers who had been reluctant to buy while prices were falling.
The home price increase is also a boost to the overall economy. Besides the jobs created by a pick-up in construction and home sales, rising prices means fewer homeowners are underwater on their mortgages, owing more than the home is worth. That allows more homeowners to refinance, saving money the can spend on other things.
The Case-Shiller index showed the improvement in home prices is broad based, as every market posted an increase for the second straight month. The biggest increases came in Phoenix, a market hit hard by the bursting of the housing bubble, where prices were 23% higher than a year earlier.
But prices were up more than 10% in half of the markets -- San Francisco, Las Vegas, Atlanta, Detroit, Los Angeles, Minneapolis, Miami, San Diego and Tampa all posted double-digit percentage gains, and Denver just missed that mark. New York posted the smallest gain, with only a 1.9% rise in prices.
Still even with the strong improvement in prices over the last 12 months, the index is still down 28% from the 2006 peak.