Where Home Prices Are Rising

This month, after three years of record declines, the battered housing market has shown some signs of hope. Tuesday the S&P/Case-Shiller 20-city Home Price Index, which is a gauge of sale prices in the country's major markets, showed a seasonally adjusted 0.3% increase between November and December.

This, in addition to February news from the Department of Commerce that housing starts were up 2.8% in January, gives economists hope for a recovery. All of this portends good things for the national market in general--but in some particular areas there are very clear signs of life.

In Depth: Where Home Prices Are Rising

Asking prices on single-family homes have increased as much as 36% from the previous year in some cities, an indicator that Michael Simonsen, CEO of Altos Research, a Mountain View, Calif. market research firm, says reflects "a bounce off the bottom of the bubble bursting."

In cities like Lexington, Mass.,Poway, Calif., a suburb of San Diego, and Allison Park, Pa., outside Pittsburgh, prices have risen because lower-priced homes are moving off the market more quickly than higher-price ones, thanks to government incentives including the First-Time Home Buyer Credit.

Elsewhere, such as in University City, Mo., inventory has risen by 29%, showing demand might still be soft, but the new homes on the market are significantly higher-priced than they were last year.

Behind the Numbers
To find out where prices are increasing the most, Altos Research pulled data for every U.S. city with at least 100 homes on the market (roughly 8,000 cities), and found those with the biggest price jumps from the previous year. Altos produced data on an individual city level, rather than using Metropolitan Statistical Areas, which can encompass large areas of multiple cities, even reaching across state lines. Altos used median asking prices based on a 90-day-rolling average as of Feb. 12, 2010. Altos tracks asking prices for single-family homes but not condominiums.

Asking price, or list price, can be revealing because it records the price of a home at the earliest point in a sale. With asking prices, trends in the market show up earlier than in other indexes, such as the sale price, or closing price, of a home--numbers that aren't recorded until several months down the road. Asking prices also say a lot about owner sentiment: If sellers are asking for more money, it means they sense demand.

Moving up in Massachusetts
Lexington, Mass., has seen prices increase more than anywhere else. List prices rose 36% since last year, to a median $1,197,923. But this more likely reflects a change in the type of house for sale than an increase in the price of a typical house.