Boston and Cleveland home prices were on the rise in August, according to Case Shiller report.

It seems that the most-damaged housing markets – such as Phoenix, Miami, San Diego, and Las Vegas – only got worse in August, according to the S&P/Case Shiller home value 20-city index for August released today. That’s no surprise. What’s interesting to me is that cities such as Boston and Cleveland were climbing into positive territory (The Boston real estate market was one of the first to fall in 2005 and it seems to be recovering sooner than other metros).

Cleveland values increased 1.1% in August compared to July and Boston metro area values, which rose 0.1% from the previous month, have been positive for five straight months. Dallas, which had been positive for four straight months, fell slightly in August.

Sadly, the mid-September financial market meltdown is likely to have weakened these markets. We’ll have to study the next couple months of housing reports to see how much damage the rising unemployment and falling stock market have done. Buyers are more anxious and so are lenders, a combination that isn’t likely to lead to more transactions.

“What we’ve learned was a housing upturn was happening in the non-speculative markets,” John Silvia, chief economist for Wachovia told me today. “Then we got the credit shock that could have easily terminated or flattened that improvement.”

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