Federal Housing Finance Agency house prices rose 0.7% on a seasonally adjusted basis from July to August.

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

"Home prices appear to be the silver lining of the housing market today, as one of the main indicators showing consistent signs of improvement and recovery," said Tim Rood, managing director of The Collingwood Group. "Given the seasonality of the housing market today, we could be in store for less optimistic home prices in the winter months."

The previously reported 0.2% increase in July was revised downward to a 0.1% increase.

Annual house prices gained 4.7%, 15.9% below the April 2007 peak.

For the nine census divisions, seasonally adjusted monthly price changes from July to August ranged from -0.5% in the East South Central division to +3% in the Pacific division while the 12-month changes ranged from 0.4% in the Middle Atlantic division to +11.4%in the Mountain division.