Home prices posted their first monthly gain in three years in May, a gauge of values in 20 major U.S. cities showed, reinforcing signs of stabilization in a market hammered by the worst slump since the 1930s, Bloomberg reported.

The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.

Price declines may keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Even so, rising unemployment, stagnant confidence and the loss of wealth caused in part by the drop in property values mean a rebound may be slow to take hold, Bloomberg said.

“After three years of this nasty housing recession, I think we’ve got to be pleased with such an improvement in a relatively short period,” said Harm Bandholz, economist at UniCredit Research in New York.

Compared with a month earlier, 14 cities showed price gains, led by a 4.1 percent jump in Cleveland and a 1.9 percent increase in Dallas.

All of the 20 cities in the index showed a year-over-year price decrease in May, led by a 34 percent drop in Phoenix and a 32 percent decrease in Las Vegas. Dallas showed the smallest decrease at 4.1 percent.

“The pace of descent in home-price values appears to be slowing,” David Blitzer, chairman of the index committee at S&P, said in a statement. “This could be an indication that home-price declines are finally stabilizing.”

The average price of homes sold in Greater Des Moines spiked in May to $182,233 from $148,666 in April, according to a report from the Des Moines Area Association of Realtors. However, the average sale price dropped in June to $168,750. All numbers represented a decline from their year-ago figures.