Shobhana Chandra
Bloomberg News

Home prices in 20 U.S. cities climbed in June from a year earlier, the first gain in almost two years, indicating the market that triggered the recession is beginning to rebound.

The Standard & Poor’s/Case-Shiller index of property values in 20 cities increased 0.5 percent from June 2011, the first gain since September 2010, a report from the group showed Tuesday.

Prices in the Cleveland metropolitan area rose 2.2 percent from a month earlier. Prices were up 7.33 percent from three months earlier and up 0.87 percent from a year ago. However, prices were still 5.30 percent lower than two years ago and 4.51 percent lower than three years ago.

The nationwide median forecast of 29 economists surveyed by Bloomberg News called for a 0.05 percent drop.

Nationally, prices jumped last quarter by the most in more than six years.

Rising demand driven by mortgage costs close to a record low has trimmed the glut of unsold houses on the market, giving property values a lift. Waning foreclosures and more access to credit would further stabilize the industry, and could bolster consumer confidence and spending.

“Sales are continuing to improve so that’s going to be supportive of prices,” Michael Englund, chief economist at Action Economics LLC in Boulder, Colo., said before the report was released.

The Case-Shiller index is based on a three-month average, which means the June data was influenced by transactions in April and May.

The 20-city index improved after showing a 0.7 percent drop in the year ended May. Year-over-year records began in 2001.

Thirteen of the 20 cities in the index showed a year-over-year gain, led by a 14 percent increase in Phoenix. Atlanta showed the biggest year-over-year drop, with prices falling 12 percent.

Foreclosures, though abating, are still a risk. Distressed sales accounted for 24 percent of existing-home purchases in July, National Association of Realtors data showed. That’s less than the prior month and down from 29 percent in July 2011. Such sales are comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage.