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For the first time in nearly three years, the Case-Shiller index of San Diego home prices increased from the prior month. The index rose .4 percent between April and May, the latest data available.

The accompanying graph shows that the increase in the index was not very big in the grand scheme of things. But home prices by this measure clawed their way slightly upward, and that hasn’t happened for quite some time.

This bump upward in the Case-Shiller index is not unexpected. For a while now we’ve been watching median prices increase, and unlike in early 2007 the rise in the median has appeared to indicate genuine home price increases resulting at least in part from a shortage of current inventory. The rise in the Case-Shiller index, which is a much more accurate measure of home prices than the median price, validates the earlier speculation that San Diego homes in aggregate have actually been increasing in value.

There are two reasons it has taken so long for the price increases to show up in the Case-Shiller index. One is that the index itself lags: the data released today only measures prices through May 2009. The second reason is that the index uses three months’ worth of sales to smooth out its results, so price changes will show up faster in the single-month median price data than in the Case-Shiller index.

It’s probably a good time to point out, yet again, that prices tend to rise in the spring and summer even during housing busts. So those who are pointing to the recent price increases as proof that “the bottom is in” will have to do a lot better than that.

— RICH TOSCANO

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