Prices of single-family homes rose in January for the eighth straight month and the annual rate moved the closest it has been to an increase in three years, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas unexpectedly rose by 0.3 percent, seasonally adjusted, matching the December increase.
On an unadjusted basis, prices declined 0.4 percent in January. S&P has said that foreclosures can skew the seasonal adjustments.
A 0.3 percent drop for the adjusted and a 0.2 percent decline for the unadjusted index were the median forecasts from Reuters surveys.
Whether there is housing market stability remains to be seen, without government incentives, said Pierre Ellis, senior global economist at Decision Economics. Healing is happening, but it's happening very slowly.
Some key government supports will soon end, including home buyer tax credits and massive Federal Reserve purchases of mortgage-related debt aimed at keeping home borrowing costs low.
Thirty-year mortgage rates have averaged around 5 percent in both January and in February, according to home funding company Freddie Mac
On an annual basis, S&P's 20-city price index fell 0.7 percent while the 10-city index was unchanged. The annual rates for the two measures have not been as close to positive since January 2007.
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 M. Blitzer, chairman of the Index Committee at S&P, said of the mixed report.
Home foreclosures and a large shadow inventory of unsold homes still loom over the fragile housing market, he said.
We are in a seasonally weak part of the year, but given the S&P/Case-Shiller home price data reported today, we can't say we're out of the woods yet.
Fewer cities experienced month-to-month gains in January than in December 2009, on both a seasonally adjusted and unadjusted basis. he noted.
From peak prices in mid-2006 through January, the 10-city and 20-city price indexes have fallen by about 30 percent.
(Additional reporting by Richard Leong; Editing by Padraic Cassidy)