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Home prices increase 1.3 percent in May

A home in Palo Alto, Calif., displays a "Sold" sign recently. Home prices in April rose for the first time in seven months as government tax credits bolstered the housing market. But the rebound may be short-lived now that the incentives have expired.(AP Photo/Paul Sakuma)

A home in Palo Alto, Calif., displays a "Sold" sign recently. Home prices in May rose for the second straight month. (AP Photo/Paul Sakuma)

AP Real Estate Writer

NEW YORK (AP) — Home prices rose in May for the second straight month as federal tax incentives pulled more buyers into the market.

The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday posted a 1.3 percent increase in May from April.

Nineteen of 20 cities showed price gains month over month. San Diego posted its 13th straight monthly gain.

Only Las Vegas recorded a price decline. The metro hit a new record low in May. Home prices there have lost 56.4 percent of their value since peaking in August 2006.

And while Detroit recorded a 0.7 percent increase from April, prices there are at levels not seen since 1994.

Overall, the gains underscore the impact of the government’s homebuying tax credits. Buyers rushed to purchase before the credits expired at the end of April. The index is an average of home sales in March, April and May.

May is typically a strong month for selling homes. Most economists don’t expect the price gains to last through the year and many predict home prices will fall through the rest of the year.

“I bet in six months 15 to 20 cities will have falling prices,” said IHS Global Insight economist Patrick Newport. He predicts prices will fall another 6 percent to 8 percent before turning around next year.

Nationally, prices have risen 5.1 percent from their April 2009 bottom. But they remain 29 percent below their July 2006 peak.

Sales of previously occupied homes fell 5.1 percent in June. New home sales jumped last month, but it was the second-weakest month on record and it came after sales tumbled in May.

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