Home prices rise 0.3 percent in December, the 7th monthly gain
On Tuesday February 23, 2010, 9:28 am EST
MIAMI (AP) -- Home prices rose for the seventh straight month in December, a sign of price stability as the U.S. housing market continues its bumpy road to recovery.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday rose 0.3percent from November to December, to a seasonally adjusted reading of 145.87. The index was off 3.1 percent from December last year, nearly matching analysts' estimates that it would fall by 3.2 percent.
Only five of 20 cities in the index showed declines from November to December. The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.
Los Angeles and Phoenix posted the largest price increases. The worst performer was Chicago with a 0.6 percent decline.
Rising prices are a key to the nation's economic recovery because they make homeowners feel wealthier and more comfortable to spend money. Consumer spending accounts for more than two-thirds of all economic activity.
Price increases also help rebuild equity for homeowners who currently owe more on their mortgages than their properties are worth. Roughly one in three homeowners with a mortgage are now in that position, according to Moody's Economy.com.
The housing market is seeking stability as it bounces back from a four-year recession. Sales of previously occupied homes fell almost 17 percent in December, the largest monthly drop in 40-years of record-keeping, the National Association of Realtors said. Data for January will be released Friday, with analysts forecasting a 1 percent rise.
Sales of newly built homes are expected to rise 5.3 percent in January, after declining sharply a month earlier. The Commerce Department will release new data on Wednesday.
On a quarterly basis, U.S. home prices fell 2.5 percent compared with the fourth quarter of 2008.
The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.