Home prices in 20 U.S. cities rose in October for a fifth consecutive month, putting the housing market and economy further along the path to recovery.
The Standard & Poor's/Case-Shiller home-price index increased 0.4% from the previous month on a seasonally adjusted basis, after a 0.2% rise in September, the index's publishers said Tuesday.
The index was down 7.3% from October 2008, the smallest year-over-year decline since October 2007.
The median forecast of economists surveyed by Bloomberg News called for a 7.2% drop.
Tax credits for first-time buyers and mortgage rates that are less than a percentage point from record lows may prevent the market from retreating after sales jumped 35% compared to the first 11 months of 2009.
"We're starting to get a little bit of a turnaround. Things are stabilizing," said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte.
"People aren't in a panic in terms of selling their homes," he said.
The median forecast was based on projections from a survey of 31 economists.
Estimates for declines ranged from 4.6% to 8%.
The seasonally adjusted 20-city index has been rising on a month-to-month basis since June, which was the first gain since it started dropping in June 2006.
Compared with the previous month, 11 of the 20 areas covered showed an increase on a seasonally adjusted basis, while eight had a decline.
The biggest month-to-month gain was in San Francisco, where prices rose 1.7%.
All the cities in the index showed a smaller year-over-year decline than in September.
To help ensure housing does not weaken again, President Obama and Congress last month extended the tax credit until April 30 from Nov. 30, and expanded it to include some current owners.
Sales of existing homes rose in November to a 6.5 million annual rate, the highest level since February 2007, the National Association of Realtors said last week. They were still 10% below September 2005 peak levels.
"The tax credit had the intended impact of drawing buyers in and lowering inventory," said Lawrence Yun, the group's chief economist. "An estimated 2 million buyers have taken advantage of the credit."
Foreclosure filings for 2009 will set a record for the second consecutive year, with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said Dec. 10. Filings in 2008 were 3.2 million.
"There are plenty of headwinds out there," said Karl Case, an economics professor at Wellesley College and a co-creator of the index, on Bloomberg Radio. Pending resets of adjustable-rate mortgages to higher rates are "clearly a huge problem and the pipeline is not clearing," he said.
Case and Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, created the home-price index based on research from the 1980s. Case announced this month that he is retiring from teaching.