Home Values Gain as Market Cools Heels in July

""Zillow"":http://www.zillow.com/ released on Tuesday its Real Estate Market Reports for July, revealing that the company's Home Value Index hit $151,600 for the month, a 0.5 percent gain from June and a 1.2 percent increase year-over-year.

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Of the metro areas covered in the reports, 62 percent saw home values climb during July, with only 49 of the 167 areas posting declines. Of the 30 largest areas covered, the Phoenix metro experienced the largest monthly increase (2.2 percent), followed by San Francisco (1.2 percent) and Denver (1.0 percent).

While rising home values may be taken as a sign of a healing

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market, Zillow chief economist ""Stan Humphries"":http://www.zillow.com/profile/Stan-Humphries/ said these increases should simmer down in the coming months.

""This summer, the housing market continued to heal, as home values experienced their eighth consecutive month of increases,"" Humphries said. ""Tight inventory levels are leading to bidding wars and multiple offers across the country. Looking ahead, we expect to see less aggressive increases in the fall as rising values lift some would-be sellers out of negative equity, allowing them to place their homes on the market.""

Rents also continued to rise, inching up 0.2 percent from June for a 5.4 percent year-over-year gain. According to Zillow's Rent Index, the average rent hit $1,278.

Nationally, rents have increased in 6 out of the last 12 months, with 70 percent of metro areas reporting rent increases from June to July.

Several metros where home values continue to decline showed large annual increases in rent, including Chicago (12.6 percent rent price gain), Providence, Rhode Island (12.1 percent), and Baltimore (11.9 percent).

Larger rent values in these areas were attributed to continued high foreclosure levels in those markets. While foreclosure continued to decline in July, historically high levels have driven up rental demand in some markets.