Next week, those with a stake in the housing market will be eyeing the September reading of the S&P Case-Shiller home price index, which will offer some local resolution on the state of the housing recovery.

Those numbers--which will be read and debated by buyers, sellers, economists and pundits--will help shed light on several regional markets, but more importantly, they'll answer a key question: Do the latest pockets of housing strength represent legitimate bounces or statistical flukes?

Over the last couple months, the Case-Shiller index had been pointing to a national market that's slowly improving. The 20-city composite was 1.2% higher in August compared with July, but home prices overall are currently at 2003 levels.

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At last glance, the best-performing markets were Minneapolis, where home prices were up 3.2% in August versus July, and San Francisco, which saw a 2.8% rise, and Detroit, where prices gained 1.9%.

The Case-Shiller index has indicated several months of modest improvement in home prices, but it's still showing double digit year-over-year declines.

"While we have turned a corner, we're at the very incipient stages of a fragile and limited housing recovery," says Stuart Gabriel, the director of UCLA's Ziman Center for Real Estate.

Several federal policies have contributed to steadying home prices. One was the first-time home buyer tax credit, which was recently extended and expanded to include existing homeowners. Interest rates on mortgages have been remarkably low, mostly because of the Federal Reserve's program to support the mortgage lending and housing markets by buying up billions in mortgage-backed securities.

Some of the markets that have been seeing price gains were among the hardest hit areas--an encouraging sign--but month-to-month fluctuations don't necessarily indicate a trend. And in this case, small sales gains could appear magnified against big drops. Cities like Detroit, San Diego and Los Angeles endured such big collapses, that each was able to report a large percentage increase in sales with a relatively modest number of actual homes of sold.

SmartMoney took a look at the seven markets that have shown the most significant upticks in home prices and assessed the local impact and sustainability of those gains.

Minneapolis: 3.2% (August/July change)

Out of the 20 cities the Case-Shiller index tracks, Minneapolis saw the biggest gain in home prices in August, but the positive news might just be an anomaly.

While Minneapolis prices saw the biggest increases in both August and July, it was down earlier in the year--5.8% in March and 3.3% in February. "What's going on there is really the volatility more than anything else," says David Blitzer, managing director and chairman of Standard & Poor's Index Committees. "I'm not sure I'd single it out as a long-term winner."

San Francisco: 2.8%

One factor contributing to San Francisco's recent rise is the big spread between the least expensive and most expensive homes. In this case, the pricier homes have been selling more than the lower-priced properties, which gave the index a boost in August, says Blitzer.

One possible explanation for the recent gains here, as well as in other metro areas is little new inventory coming on the market, while regular buyers and investors are stepping in to take advantage of bargain properties.

Detroit: 1.9%

Detroit was one of the hardest-hit areas of the downturn, suffering from ongoing and significant job loss, migration of population, and large-scale abandonment of housing. Home prices in the one-time car-production center are about 30% lower than they were in 2000, says Blitzer.

Despite a recent run-up in home prices, the overall housing picture for Detroit over the mid- to long-term is more troubled, Gabriel says. "I would be reticent to read much into the recent numbers," he says.

Chicago: 1.7%

The Windy City is continuing to show some general strength and stability. Prices never reached the highs associated with some of the Sunbelt cities, but the market has experienced some gradual gains over the past four months, Blitzer says. The bottom appears to have been in April for Chicago, when its Case-Shiller index level was at 122.30--it rebounded to 130.55 in August.

San Diego: 1.6%

Los Angeles: 1.6%

Phoenix: 1.6%

The month-to-month improvement in these metropolitan areas can be attributed in part to the fact that they bore the brunt of the subprime mortgage debacle.

"Some of these markets have fallen the hardest over the course of the recent housing implosion," says Gabriel. "It's certainly true for some West Coast markets and for Phoenix." Much of the interest from buyers, as well as investors, is at the low end of the market - and that is where the stabilization is occurring. Homes priced at $100,000 and lower have seen the most significant sales jumps in the Western part of the country, according to the National Association of Realtors.

San Diego, for example, was one of the most overpriced markets in the country, says Tracey Seslen, an assistant professor clinical finance at the University of Southern California. "The hardest-hit markets are naturally going to be the ones going to show stronger growth when things start to pick up again... It's a mean reversion," she says.

As for a continued rebound, even if there's an increase in prices for one or two months, it doesn't mean we're on the road to recovery, Seslen says. California has a staggering unemployment rate--12.2% as of September. "There are a lot of macro factors impacting people's ability to buy food, let alone a house," she says.