Property values in May notched the biggest annual gain in three years as home prices in 20 citeis rose more than 4%, beating analysts’ expectations.

The S&P/Case-Shiller index of property values rose 4.6% in May year-on-year as home buyers rushed to close deals to qualify for the federal tax credit program. The increase, which was the biggest since August 2006, exceeded earlier estimates of below 4.5%.

According to the report, 13 of the 20 cities listed in the index showed an annual jump in home prices. The biggest price increases were recorded in California, with the cities of San Francisco and San Diego registering gains of 18% and 12%, respectively. As compared with the previous month, 19 of the 20 areas covered by the index notched an increase on an unadjusted basis, led by a 2.7% gain in Minneapolis, Minnesota, and a 2% surge in Atlanta, Georgia.

S&P index committee chairman David Blitzer said the first-time home buyer’s tax credit program still has a noticeable effect on the housing market despite its expiration on April 30. “There may still be some residual impact from the home buyers’ tax credit. It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy,” he added.

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