Home Price Gains Go to Double Digits

Home prices saw their largest annual gains in six years reaching double digits on a widely watched monthly report.

Prices in the nation's top ten and top twenty markets rose 10.3 percent and 10.9 percent in March from a year ago on the S&P/Case-Shiller Home Price Indices.

These are the highest annual returns since 2007 for the two. Nationally prices rose 10.2 percent annually in the first quarter.

(Read More: Boom Is Back: Home Prices Jump Most in Seven Years)

"We are still coming off the bottom," said S&P's David Blitzer. "Right now they're healthy, if we go far beyond this, we're talking in six months or a year from now, twenty percent gains. Then I think we start getting worried about bubbles again."

Home prices in all twenty cities posted annual gains for the third month in a row, and twelve of the twenty saw double-digit growth. Phoenix continues to lead, with home prices up 22.5 percent from a year ago, according to S&P/Case-Shiller, followed by San Francisco and Las Vegas—each also up over 20 percent.

(Read More: Map—Tracking the Real Estate Recovery)

"The range of how prices are going up substantially varies around the country," explained Blitzer. "There's a huge range of what's happening out there. There are clearly some spots where prices are going through the roof."

New York, Cleveland and Boston posted the weakest price gains, as a large backlog of foreclosures continue to plague areas in the Midwest and Northeast. Only Minneapolis and New York saw prices fall from February to March, while Chicago and Cleveland were flat, when not accounting for seasonal adjustments.

This is an improvement from February, when eight markets saw home prices fall month-to month.

Despite the strong gains, home prices are still down approximately 28-29 percent from their peaks in the summer of 2006 and are now back at levels not seen since late 2003.

While prices continue to improve, there are still headwinds, specifically a relatively weak employment picture and a tight mortgage market. Existing home sales are also recovering far faster than new home sales, and much of the gains in new home construction is in multi-family apartments, as single family housing starts lag.

(Read More: Record High New Home Prices to Grow)

"Housing is making a positive impact on the economy, if one goes through the GDP numbers, residential construction is adding to economic growth," said Blitzer. "But when you look at this, buying and selling existing homes, is recognized, we all feel good, the prices are going up, it doesn't add anything to GDP."

—By CNBC's Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

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