Home prices were up 1.8% in the second quarter, compared to the first quarter, in the largest price increase since the end of 2005, according to data released today in the Federal Housing Finance Agency’s (FHFA) purchase-only house price index. Year-over-year, prices improved 3.0%.

FHFA’s monthly index was up 0.7% in June, compared to the previous month.

"Although some housing markets are still facing significant challenges, house prices were quite strong in most areas of the second quarter," said Andrew Leventis, FHFA’s principal economist. "The strong appreciation may partially reflect fewer homes sold in distress, but declining mortgage rates and a modest supply of homes available for sale likely account for most of the price increase."

See FHFA’s full report, including regional data, on second-quarter 2012 home prices.

Claire Easley is a senior editor at Builder.