Home prices rose for the fifth month in a row in October, but the recovery is shaky with only 11 of the 20 metro areas tracked showing gains.
The Standard & Poor's/Case-Shiller home price index released Tuesday edged up 0.4 percent to a seasonally adjusted reading of 145.36 in October from September. Without adjusting for seasonal factors the index was flat.
The index was off 7.3 percent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters. Many economists, however, are predicting a double dip in prices this winter as foreclosures increase and government support wanes.
"I'd be very surprised if we don't go below the lows we hit this year," Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington think tank. "We still have a very glutted housing market."
The index is now up 3.4 percent from its bottom in May, but still almost 30 percent below its peak in April 2006.
There are also wide variations from around the country. Prices have climbed for at least six months in a row in Denver, Washington, Minneapolis and San Francisco, for example.
"We saw an unusually low amount of inventory on the market," which helped prices firm, said Frank Castaldini, an agent with Coldwell Banker in San Francisco.
Properties at the lower end — between $500,000 and $600,000 — also received multiple bids, partly due to a federal tax credit for first-time homebuyers, he said.
But in Chicago and Tampa, Fla., prices fell slightly from September. And there's no sign of a bottom in Las Vegas, where prices have tumbled by more than 56 percent from their peak in April 2006.
"People hear prices are getting better, but they're not here," said Penny O'Brien, a real estate agent with Re/Max Experience in Las Vegas. "Unemployment has got people scared of purchasing."
The tax credit didn't make a big dent in the Las Vegas market either, O'Brien said, because many first-time buyers were elbowed out by all-cash investors.
Home prices play a key role in the economy. Homeowners feel wealthier when property values rise and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the banks than their houses are worth.
The positive trend in home prices and a better employment outlook helped raise the Consumer Confidence Index to 52.9 in December, up from a revised 50.6 the month before, the Conference Board reported Tuesday. While far below a 90 reading that would signify a solid economy, consumers' outlook on jobs over the next six months reached its highest level in two years.
The federal government has stepped in with far reaching programs to create jobs and make homeownership more affordable.
Home price gains since the summer reflect the rush of homebuyers trying to close their deals before the original expiration date of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.
Besides a credit of up to $8,000 for first-time buyers, Congress expanded the program to include homeowners who have lived in their current properties for at least five years. They can now claim a tax credit of up to $6,500 if they relocate.
The Federal Reserve is also buying up $1.25 trillion in mortgage-backed securities to help keep interest rates at historical lows.
AP Real Estate Writer Alan Zibel in Washington contributed to this report.