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Home Prices See Gains, But That's Not the Whole Story

It is not exactly a trend, but for the second-straight month, U.S. home prices saw year-over-year gains.

Phillip Spears | Digital Vision | Getty Images

Including distressed sales (foreclosures and short sales), prices rose 1.1 percent in April, according to a new report from analytics firm CoreLogic.

Excluding distressed sales, prices rose 2.6 percent. Prices have not been up two months in a row since June 2010, when the home buyer tax credit was in force.

The national gains, however, belie a deeply disparate state-to-state housing market.

Home prices rose dramatically in markets where distressed homes make up the majority of sales, like Arizona, up 8.8 percent annually and Florida, up 5.5 percent. That’s because inventories of foreclosures have shrunk due to more slowdowns in bank processing.

Meanwhile other states with relatively smaller shares of distressed sales saw prices plunge: Delaware, down 10 percent, Alabama down 4.4 percent and Connecticut down over 2 percent, according to CoreLogic.

The spring sales season, while not exactly robust, was busy, especially for investors in distressed properties.

As for the summer, the numbers do not look as strong. After two months of gains, asking prices on for-sale homes, a two-month leading indicator, were unchanged in May month-to-month, according to a new report from sale site Trulia.com.

“Asking prices and employment both stagnated in May, yet one more reminder that the housing recovery depends on job growth,” said Jed Kolko, Trulia’s chief economist. “The metros where prices rose the most have stronger demand from faster job growth and tighter supply from fewer foreclosed homes on the market.”

As home prices grew, so too did rents. Nationally, rents rose 6 percent in May from a year ago, according to Trulia, and the increases are accelerating each month.

In San Francisco, Miami, and Denver, rents are up over 10 percent year over year, and Boston is up just a hair under 10 percent.

Renting is now more expensive in many metro markets, but tight credit is still holding many potential buyers back.

May’s disappointing jobs report would seem to indicate a slowdown in home buying this summer, and more heat for the rental market.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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