US home prices see biggest annual rise since 2006

San Francisco Giants starting pitcher Madison Bumgarner San Francisco, home of the Giants baseball team, has seen home prices rocket 20% over the year

US home prices have seen their biggest annual rise since 2006, a closely-watched survey suggests.

The Standard & Poor's/Case Shiller index, which monitors single-family home prices across 20 cities, rose 12.1% in April compared to the same month last year.

The jump, due to increasing demand and a shortage of supply, was bigger than many analysts had been expecting.

Month-on-month, the index rose 2.5% in April compared to March.

All cities except Detroit experienced year-on-year price rises, with 12 posting double-digit gains.

San Francisco saw home prices rise more than 20% over the year.

"The recovery is definitely broad-based," said David Blitzer, chairman of the index committee.

Tailspin

Last week, Ben Bernanke, Federal Reserve chairman, suggested that the central bank would begin scaling back its $85bn-a-month bond buying programme, sending global stock markets into a tailspin.

The news raised fears that mortgage rates would rise as a result and dampen the recovery in the housing market.

"Last week's comments from the Fed and the resulting sharp increase in Treasury yields sparked fears that rising mortgage rates will damage the housing rebound", said Mr Blitzer.

But he argued that, as some banks were easing credit restrictions, this should counteract any slowdown effect that higher mortgage rates might have.

"Given this, the recovery should continue", he said.

Expectations

In other economic news, orders for durable goods rose 3.6% in May, the same rise as in April and above expectations.

The positive data helped check Wall Street's recent rout, with the Dow Jones Industrial Average rising 101 points, or 0.7%, to close at 14,760, nearly reversing Monday's 139 point drop.

The S&P 500 was up 15 points, or 1%, at 1,588, while the Nasdaq rose 27 points, or 0.8% to 3,348.

The news also saw the US dollar strengthen slightly against the euro, gaining 0.3%.

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