Federal Housing Finance Agency house prices rose 1.1% on a seasonally adjusted basis from August to September, this is the eighth consecutive month prices have increased. The home price also rose 4% from the previous year. 

The monthly house price index uses the purchase prices of houses with mortgage owned or guaranteed by Fannie Mae or Freddie Mac.

The prominent growth from 0.7% last quarter to 1.1% this quarter is due to the amount of inventory of homes for sale. Over the last four quarters, the index is up 3.3%.

"With significant growth in home prices during the quarter and a modest inventory of homes available for sale, house price movements in the third quarter were similar to what we observed in the spring," said principal economist Andrew Leventis of FHFA.

He added, "The past year has seen consistent price increases, but a number of factors continue to affect the recovery in home prices such as stagnant income growth, high unemployment levels, lingering uncertainty about the macroeconomy, and the large number of homes in the foreclosure pipeline."

The seasonally adjusted purchase-only HPI rose in 39 states for the third quarter. Housing prices were strongest in the Mountain division, up 3%, while the East South Central division fell .2%. 

Click on the graph to view the FHFA history of HPI.

Standard & Poor’s/Case-Shiller Home Price Indices also reported an increase in home prices, up 3.6% from a year ago. Lender Processing Services (LPS) posted a year-over-year HPI increase of 3.6% from last year as well. These indices indicate the housing industry is gaining momentum in its recovery.