Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands.

The Standard & Poor's/Case-Shiller National Home Price index climbed 0.3% from the prior month on a seasonally adjusted basis, matching the gain in December, according to data released Tuesday. The gauge was down 0.7% from January 2009, the smallest year-over-year decrease in three years.

Cheaper homes, low borrowing costs and government incentives have combined to support the housing market, which helped trigger the worst recession since the 1930s. A lasting recovery requires gains in hiring that may help stem foreclosures, easing the pressure on prices and giving Americans the confidence to spend.

"It's a temporary stabilization," said Joseph Brusuelas, the president of Brusuelas Analytics in Stamford, Conn., who had forecast a month-over-month gain in the adjusted index.

"Foreclosures are still going to bite the market. Given the preponderance of negative housing data, we may see another leg down."

Seasonally adjusted home prices were forecast to fall 0.3% from the prior month, according to the median forecast of 18 economists surveyed by Bloomberg News.

The gauge was projected to drop 0.7% from January 2009, according to the survey, following a 3.1% decrease in the 12 months ended in December. Year-over-year records began in 2001.

"While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading," David Blitzer, the chairman of the index committee at S&P, said in a press release.

"Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult and concerns remain about further foreclosures and a large shadow inventory of unsold homes," Blitzer said.

Compared with December, 12 of the 20 areas covered showed a seasonally adjusted increase. Los Angeles had the biggest gain from December, rising 1.8%, followed by San Diego, which posted a 0.9% increase.

Six of the 20 cities showed an improvement in seasonally adjusted prices in January. Home prices increased in Cleveland and Tampa in January after falling the previous month.

Some recent industry reports have indicated renewed price pressure. Twelve cities, including Boulder, Colo., and Providence, R.I., are showing extended declines in housing values, reversing signs of a recovery that began last year, according to Zillow.com, a Seattle real estate information provider.

The number of markets in a "double dip" jumped in January from five a month earlier, said Zillow, which defines a double dip as five consecutive price drops after at least five straight monthly increases. The gains must have been preceded by a period where values fell in at least 10 of 12 months.

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