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Case-Shiller Index: November Home Prices Rise, But Still Off 5.3 Percent From A Year Ago

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MIAMI — Home prices rose for the sixth straight month in November, fueled by tax credits for homebuyers.

The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analysts' estimates that it would fall by 5.1 percent.

Fourteen of 20 cities in the index showed gains from October to November. The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.

Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Consumer confidence rose for the third straight month in January, reaching its highest level in more than a year, the Conference Board said Tuesday.

Price increases also help restore home equity for "underwater" homeowners, or those who currently owe more on their mortgages than their homes are worth. Roughly one in three homeowners with a mortgage are now underwater, according to Moody's Economy.com.

In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that current price trends could lead to a $1 trillion year-over-year increase in homeowner equity by the first quarter of this year.

Karl Case, a co-creator of the index, pointed to signs of stability that were in stark contrast to rapidly falling prices a year ago. "Flat is good," he said.

The housing market is on a zig-zagging recovery 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 Monday.

But sales of newly built homes are forecast to rise 4 percent. The Commerce Department will release December data on Wednesday.

The Case-Shiller index showed Phoenix and San Francisco had the highest month-to-month gains in November, while New York and Chicago had the largest declines on a seasonally adjusted basis.

The tax credit for first-time homebuyers had been scheduled to end Nov. 30, but Congress extended the deadline through April, and expanded the program to include a tax credit for current homeowners.

"A lot of people are thinking now is the time to buy because they are going to get a great bargain or a steal," said Bill Wilkerson, a real estate agent with ZIP Realty in Phoenix. "I'm looking forward to a very active springtime."

Prices climbed for the seventh straight month in San Francisco, where sales in the $500,000 to $750,000 were strong. Buyers took advantage of the tax credits and low interest rates, said Chuck Colliver, president of Century 21 Alliance in Daly City, Calif.

"Those people who have been thinking about buying a house this year are probably going to put it on the front burner" because of the low rates, Colliver said.

In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.

The list of cities with price increases, on a seasonally adjusted basis, also included Los Angeles, San Diego, Denver, Boston and Charlotte, N.C.

While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.

"Until we get job growth, we won't get complete healing of the housing market," said Jeff Humphreys, an economist with the University of Georgia.

Data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended, Humphreys said.

UBS analyst David Goldberg estimates that prices could drop another 3 to 5 percent before unemployment levels out, possibly in the second half of this year.

"We're probably in the latter stages of seeing home price declines," Goldberg said.

Home prices fell for the third straight month in Tampa, Fla., where sales of distressed properties comprise about half of total sales, said Cathleen Smith, a regional vice president with Coldwell Banker.

Prices also dropped in Washington – which had posted seven straight monthly increases – Miami and Detroit.

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.

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AP Real Estate Writer Alan Zibel and AP Data Specialist Allen Chen contributed to this report from Washington and New York.

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