Florida, United States – US home prices rose for the sixth straight month in November, fuelled by tax credits for homebuyers.

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

The index is now up more than three per cent from its bottom in May, but still 30 per cent below its peak in May 2006.

Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Price increases also help restore home equity for the one-in-four homeowners who currently owe more on their mortgages than their homes are worth.

In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that the price improvements should lead to a US$1 trillion increase in homeowner equity by the current quarter.

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.

Phoenix and San Francisco posted the highest month-to-month gains, on a seasonally adjusted basis, while New York and Chicago had the largest declines.

The tax credit for first-time homebuyers had been scheduled to end November 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 increased for the seventh straight month in San Francisco, where sales in the US$500,000 to US$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, California.

“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 per cent, the first month-to-month increase since January 2007. Still, prices are down 56 per cent 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, North Carolina.

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.