Home prices in 20 cities rose in August for a third consecutive month, according to data released Tuesday, bolstering the case that an economic recovery is at hand.
The S&P/Case-Shiller home-price index climbed 1% from July, on a seasonally adjusted basis, after a 1.2% increase in July.
From a year earlier, the gauge was down 11.3%, less than forecast.
Rising home sales, due in part to government programs, including the first-time buyer credit, and efforts to reduce borrowing costs, have helped stem the slump in property values.
"We're nearing the bottom in home prices," said Patrick Newport, an economist at IHS Global Insight in Lexington, Mass. "Right now the government is helping to stabilize housing."
The housing index was expected to have fallen 11.9% from August 2008, after a 13.3% drop in the 12 months through July, according to the median of estimates by 33 economists surveyed by Bloomberg News. Their estimates ranged from declines of 11% to 13.3%. Year-over-year record keeping began in 2001.
The gains during the three summer months were the strongest since the three months through December 2005.
Nineteen of the 20 cities in the S&P/Case-Shiller index showed smaller declines year-over-year than in July. Dallas had its smallest drop since August 2008, at 1.2%, and Las Vegas reported a 30% decline, the most for any city.
Compared with July, 15 of the 20 cities covered showed increases while four showed declines. The biggest month-over-month gain was in San Francisco, up 2.6%.
The latest evidence of rising demand was a jump in existing-home sales in September, to a 5.57 million annual rate, more than economists had forecast and the highest in more than two years, according to National Association of Realtors data issued last week.
One risk to the emerging stabilization is foreclosures, which are expected to climb through late 2010, peaking only after the unemployment rate reaches 10.2% in the second quarter, Jay Brinkmann, the chief economist of the Mortgage Bankers Association, said this month.
Economists and industry groups expect home sales to cool off once the $8,000 tax credit for first-time buyers expires on Nov. 30. Lawmakers are debating extending it.
The Standard & Poor's Supercomposite Homebuilding Index has climbed 22% since the beginning of July on the improving outlook for housing, compared with a 16% increase in the S&P 500 stock index. The builder index fell Monday on concern that the tax-credit program may not be extended.
Robert Shiller, the chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
Case said in an interview Tuesday that the latest index data indicates that the market "really looks like bottom."