U.S. home prices continued to rise in August, marking the fifth consecutive month of improvement and adding fodder to growing sentiment that the housing market's worst days are behind it.

The latest S&P/Case-Shiller Home Price Indices report showed that on a month-to-month basis, the 10-City and 20-City Composites each rose 0.9 percent from July levels, and 19 out of the total 20 cities surveyed saw positive monthly changes, with the exception of Seattle.

The improving data comes hand in hand with other positive statistics, such as increases in new homebuilding as well as existing home sales, according to the report—all indicators that consumers are coming back to the market.

Single-family housing starts—the measure of supply—is up 43 percent from the previous year's pace, while demand for homes is rising, and consumer mortgage default rates are dropping to new lows, the report said.

"News on home prices confirm other good news about housing," David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in the report. "Further consumer confidence continues to rise. Even as we end the seasonally strong home buying period, the statistics are positive."

Indeed, some are still reluctant to call this stretch of improvement a bona fide recovery in housing, because home prices are traditionally stronger during the summer months, as many opt to purchase and move before the winter holiday season. But there's no doubt that a full-fledged recovery in housing is widely considered to be a key element in an overall economic recovery in the U.S.

But for now, it seems the market is at least moving in the right direction, even if home values, on average, remain about a third off their mid-2006 peak levels. A home in the U.S. today, on average, costs roughly what it did in summer of 2003.

Annual Numbers Also Fuel Optimism

On an annual basis, the 10-City and 20-City Composites are now 1.3 percent and 2.0 percent higher than what they were in August 2011, better annual rates than those seen in July.

What's more, home prices in 18 out of the 20 cities surveyed are now higher than they were a year ago, even if three cities still show negative annual rates—meaning the hole is getting shallower, but prices are still in the red.

Phoenix leads the pack, with annual gains of 18.8 percent from August 2011 levels, while Atlanta sits at the other end of the spectrum, with a negative annual rate of growth. Home values in Atlanta in August were still 6.1 percent lower than they were a year ago.

Seattle, the only city in the monthly data to show a month-on-month decline from July levels (prices there dropped 0.1 percent in August vs. July), still managed to hold onto a positive annual rate of 3.4 percent compared with home prices a year ago.

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