Sun-drenched Arizona became a poster child for the overdevelopment excesses of the boom, but it's recently become a leader in the country's long-awaited housing recovery.

Home prices in the Phoenix, Mesa and Glendale areas rose 14.7 percent in May, compared to the prior year, the highest jump in the areas tracked by a CoreLogic report released Monday, which included distressed sales. Median home prices in metro Phoenix as a whole are up 32 percent in May compared to the prior year, according to an Arizona State University report, comparable to 2003 levels.

Phoenix is definitely on the leading edge of the recovery. We have seen remarkable sales velocity and price increases, Charlie Enochs, division president of home builder Taylor Morrison, told the Tucson Citizen.

The area has already seen an uptick in multifamily rentals, from developer giants like Archstone, but the recovery has appeared to shift to for-sale single-family homes.

Bloomberg Businessweek reports that building permits are near a four-year high and construction workers are once again in high demand, with employment rising 9.3 percent in May over the prior year. Builders are actually struggling to find workers, who have moved away during the recession. The state's tough anti-illegal immigration policies have also discouraged laborers from entering the market.

Home prices are still about halfway off the 2006 peak, and investors are driving demand, rather than traditional homebuyers, who may struggle to obtain mortgages in the uncertain market. Many of the investors pay in all cash and seek to flip distressed properties priced under $250,000 by refurbishing them and selling for a profit.

But NPR notes that many of the bargains have dried up and inventory has dropped, due to a lack of sellers and also a slowdown in foreclosures, which have fallen by around 60 percent in the past year in the Phoenix area. There were 8,550 homes for sale in May, down around 50 percent from the prior year, according to the Arizona State University report. High demand and low supply are the drivers of the market, wrote Mike Orr in the report.