Is the slump over?

Home prices in February posted their first year-over-year increase since December 2006, according to the latest S&P Case-Shiller home price index released Tuesday. Home prices in the index s 20-city composite crept up a scant 0.6%, but prices fell month over month.

In a battered housing market where each positive decimal-point-worth of growth has observers heralding a turnaround, the first annual increase in three years is encouraging, analysts say.

But before a rebound is declared, there are a few factors to consider. The biggest: the federal home buyer tax credit, which expires April 30. The $8,000 credit has spurred home buying activity and made the first few months of 2010 busier than usual. Once the credit deadline passes, there s likely to be a drop-off in prices, says David Blitzer, managing director and chairman of the index committee at Standard & Poor s. We ve probably stolen some sales from the next few months as people hustle to take advantage of the free money from Uncle Sam, he says.

Construction data for February showed signs of life: Housing starts for February were up 0.2% year over year, and jumped 20% in March from the year prior. But they were still less than half the number of starts in 2007, according to the Census Bureau.

Of the 20 metropolitan areas, prices are now rising on a year-over-year basis in nine cities, most notably on the West Coast, including San Francisco (11.9%), San Diego (7.6%) and Los Angeles (5.3%), while Washington, D.C. posted a 5% rise. The largest declines were in Las Vegas (-14.6%), Tampa (-6.1%) and Seattle (-5.6%).

Here s a look at six metros that had some of the best price increases and worst declines from last year.

San Francisco

Hands-down the strongest-performing market in February was San Francisco, which posted an 11.9% gain over the past 12 months. California has been strong the last couple of months. There does seem to be something of a serious revival going on, says Blitzer. One month would be a fluke, but these California metros have been seeing gains over the past several months, he says.

The recovery can in part be attributed to a lack of land. Coastal cities like San Francisco don t have that much space to build hundreds of homes. From peak to trough, home values in San Francisco fell by some 40%, says Robert Van Order, a professor of real estate and finance at George Washington University s School of Business. In the long run, you d expect to see growing values there because it s an inelastic market. There s not much room to build, so it has pretty good prospects, he says.

San Diego

The same supply-demand concept holds true for San Diego. There s just not enough property on the market, says Leonard Baron, principal of LPB Services, a real estate consulting firm in San Diego, and a lecturer at San Diego State University.

Prices here dropped enough that investors and first-time home buyers have been fighting over moderately priced properties for the last six to eight months, says Baron.

The majority of properties selling now in San Diego many of which are moderately priced are getting 15 to 20 offers within a few days, says Baron. That s partly to do with federal tax credit, and also to do with the California state credit. (The state tax credit begins May 1, and is worth up to $10,000. First-time buyers can purchase a new or existing home but repeat buyers can only purchase a new home that has never been occupied.)

Home prices in the capital saw a 5% increase since February 2009. Though Washington, D.C. s market has been perking up, it generally didn t suffer the problems that the worst places in country did. D.C. didn t have a strong subprime market or a strong bubble, Van Order says. And changes in administrations like the one that came early last year tend to help property markets. People come in and buy houses, which contributes somewhat to the area s stability, he says.

Tampa, Fla.

The Tampa area saw the second-steepest year-over-year decline within the 20-city index, dropping 6% compared to last February, and falling 1.2% month over month. The Florida unemployment rate set a new high in March, at 12.3%, according to the Labor Department. Tampa s unemployment rate is higher than the state s, says Randy Johnson, a professor of real estate at the University of Central Florida. Florida also saw significant overbuilding, with too many single-family and multi-family homes built relative to the actual number of households, Johnson says. The state s population growth has slowed recently in part because people haven t been able to sell their homes and move down here and retire, he says.

Within the state, more stable, mature markets are closer to hitting a bottom or picking up. In contrast, tertiary markets may still take a while to stabilize, says Johnson. That s because prices there rose disproportionately during the boom, as buyers were priced out of neighborhoods closer to employment hubs. There may be good deals in those neighborhoods now, but make sure that you get a substantial discount if you re considering buying further out from a city center, he says.

Las Vegas

Las Vegas home prices suffered the steepest year-over-year decline in the Case-Shiller index, falling 14.6%. Condos make up a higher percentage of existing home sales this year compared to last year, which tends to drag down the overall median price, says Andrew LePage, an analyst with MDA Data Quick, which tracks real estate information. In March, buyers appeared to pay cash in 48.5% of all home sales a slight decrease year over year, but still an elevated level that suggests investors are hunting for bargains, according to MDA Data Quick. That s common in many parts of the West, where prices have fallen sharply and investors are competing with traditional first-time buyers, LePage says. Not to mention, it s not as if they ve experienced some sort of economic rebound there, he adds.

Seattle

Home prices in Seattle fell 5.6% year over year in February, according to the Case-Shiller index. In part, that s because Seattle and other parts of the Northwest didn t have as much trouble with risky financing of home loans. Those markets didn t have quite the boom, and they shouldn t be expected to have quite the bust, LePage says. While Seattle s prices won t necessarily fall as sharply as harder-hit markets, no market s immune from the economic downturn and credit restraints, he says.