FORTUNE — Home prices in 20 U.S. cities rose at a slower pace for the year ending in March 2014, though gains have surpassed economists’ expectations.
Home values for single-family residences increased 12.4% from March 2013, according to the S&P/Case-Shiller index, which tracks property values across the top 10 and 20 biggest U.S. metropolitan areas. That’s the slowest 12-month gain since July and down from the 12.9% annual increase reported in February.
“The market is still on the up,” Robert Shiller, co-founder of the index, said in an interview on CNBC. “Things are still looking positive despite some bad news we had on housing starts.”
Property values increased in 19 of the 20 cities measured by the Case-Shiller index. New York City was the only city to register declines over the month as housing prices in Chicago showed their highest year-over-year gain since 1988, growing by 11.5%. Las Vegas and San Francisco, the two cities with the highest annual return, saw housing price growth slow to about 21%, down from their post-crisis peak growth rates of 29.2% and 25.7%, respectively.
An average estimate from 28 economists predicted an 11.8% increase in home values for the year ending in March, according to Bloomberg data.
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While the U.S. housing market has seen some good news recently, like an increase in housing inventory and sales, the Federal Reserve identified a slowdown in housing as a risk to ongoing economic growth in its April policy meeting.
Indeed, the U.S. housing market is sending mixed signals, said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “April housing starts recovered the drop in March, but virtually all the gain was in apartment construction, not single family homes. New home sales also rebounded from recent weakness but remain soft. Mortgage rates are near a seven-month low, but recent comments from the Fed point to bank lending standards as a problem.”
Housing starts increased almost 13% in April, but most of the gains were for rental-focused multi-family apartment complexes. Single-family home starts gained 1% in April.
Meanwhile, home sales are starting to recover. Sales of previously owned homes rose for the first time this year in April, increasing 1.3%, and the inventory of unsold homes in April jumped by 6.5% from the previous year, the highest growth rate since August 2012. A boost in housing inventory helps moderate prices and could bring more buyers into the housing market.
Investors also remain a very important force in the housing market, Shiller told CNBC. During the boom years, the buying spree was led by buyers who were snapping up second homes, but recently, financial buyers have been driving the recovery. “The psychology has changed. Homeowners have been losing interest,” he said. “Investors have been really excited by the upward momentum.”