U.S. home prices rose for the fourth straight month in August and shoppers spent more last week, providing evidence consumer demand could be stabilizing.
The Standard & Poor's/Case-Shiller report on Tuesday showed a composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July, well above the estimate of a 0.7 percent rise found in a Reuters poll. The increase, however, was less than the 1.6 percent seen in July.
Broadly speaking, the rate of annual decline in home price values continues to improve, David Blitzer, chairman of the index committee at S&P, said in a statement.
While the U.S. housing market, a primary driver of the worst U.S. recession since the 1930s, has found some footing after a three-year slump, it remains highly vulnerable to setbacks.
The increase in house prices helped push up U.S. stock prices and weaken the dollar against other currencies as investors took the data as a cue to consider riskier assets.
Adding evidence U.S. consumer spending may be on the mend, two separate reports on Tuesday showed sales at retailers have picked up.
Blitzer said the upcoming expiration of the government's $8,000 tax credit for first-time home buyers on November 30 and anticipated higher unemployment rates through year-end could negatively impact home prices going forward.
Both may have a dampening effect on home prices, he said.
Furthermore, many analysts say prices are poised to fall again, with a new wave of foreclosures in the pipeline.
The composite index of prices in 10 metropolitan areas gained 1.3 percent in August after a 1.7 percent rise the previous month.
The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 10.6 percent drop in the 10-city index and a 11.3 percent decrease in the 20-city index.
The International Council of Shopping Centers and Goldman Sachs, in seasonally adjusted weekly data, showed a rise in U.S. chain store retail sales.
The Johnson Redbook Retail Sales Index also showed an increase.
(Editing by Andrea Ricci)