US home prices were up 4.6 percent year-on-year in January but the gains continued to be held back by marginal wage increases, according to the S&P/Case-Shiller report Tuesday.
The Case-Shiller 20-city price index was virtually unchanged from December, but on a 12-month basis was better than the 4.4 percent gain in December.
"Despite price gains, the housing market faces some difficulties. Home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback," said David Blitzer, head of the Index Committee at S&P Dow Jones Indices.
"Moreover, the new home sector is weak; residential construction is still below its pre-crisis peak. Any time before 2008 that housing starts were as low as the current rate of one million, the economy was in a recession."
The housing market has been lackluster for months, despite low mortgage interest rates and stronger job growth that could fuel home purchases.
Growth in wages and salaries has been weak, with the latest data showing it slowed in February.
"We expect the housing market recovery to continue in 2015, albeit at modest and choppy pace," Barclays analyst Blerina Uruci said.