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U.S. home prices rise in Aug, yearly gain best since 2006: S&P

A 'sale' sign is seen outside a house in Alexandria, Virginia in this July 22, 2010 file photo. REUTERS/Molly Riley/Files
A 'sale' sign is seen outside a house in Alexandria, Virginia in this July 22, 2010 file photo. REUTERS/Molly Riley/Files

NEW YORK (Reuters) - U.S. single-family home prices rose in August and also posted their strongest annual gain in more than seven years, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.9 percent on a seasonally adjusted basis, beating economists' expectation of a 0.6 percent gain. Prices rose 0.6 percent in July.

On a non-adjusted basis, prices rose 1.3 percent.

Compared to a year earlier, prices were up 12.8 percent, beating economists' expectations of 12.5 percent and marking the strongest gain since February 2006, when the increase was 13.8 percent.

The August price gains came despite a rise that month in 30-year mortgage rates that slowed mortgage applications and refinancing activity.

The report suggested the housing sector continued to recover despite those headwinds. Home prices have been rising nationally since early 2012 and economists have singled out housing as one of the bright spots of the U.S. recovery.

Prices in all 20 cities rose on a non-seasonally adjusted yearly basis, led by a 29.2 percent gain in Las Vegas and followed by a 25.4 percent increase in San Francisco.

(Reporting By Steven C. Johnson; Editing by Meredith Mazzilli)

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