Home prices rose for the fourth month in a row in May, suggesting the recovery in the housing market continued to gain traction, even as the broader economy wobbles, Reuters reported.

Other data on Tuesday showed consumer confidence unexpectedly rose in July but spending fell in June for the first time in nearly a year as Americans saved more. The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.9 per cent in May from April on a seasonally adjusted basis, topping economists’ expectations for a 0.5 per cent gain.

The housing market, which collapsed during the 2007-2009 recession, has been a relative bright spot in the economy this year, although it remains hobbled by tight mortgage availability and on-going foreclosures. “Real estate continues to show improvement off the bottom.

That’s one of the few encouraging signs we’ve seen,” said Subodh Kumar, an investment strategist at Subodh Kumar & Associates in Toronto. On a non-seasonally adjusted basis, prices fared even better, jumping 2.2 per cent.

Compared to a year ago, price declines moderated to slip 0.7 per cent, the smallest drop since the last time year-over-year prices rose in September 2010. Economists cautioned prices could weaken again once the traditionally strong spring and summer buying season is over.

“The most likely scenario is that home prices will zigzag over the coming months, rising during the selling season, and slipping in the fall,” said Michelle Valverde, U.S. economist at IHS Global Insight.

Housing makes up a smaller share of the economy than before the recession and can provide only a limited lift to the broader recovery, which has hit a soft patch in the wake of the euro zone debt crisis and a struggling domestic labor market.

The Labor Department is scheduled to release its employment report for July on Friday, with non-farm payrolls expected to rise a modest 100,000, according to a Reuters poll.

Pressure is rising on the Federal Reserve to do more to help the sputtering US economy as policymakers at the central bank start a two-day meeting on Tuesday. No major policy change is expected to be announced on Wednesday although some economists think the Fed could push further into the future its conditional pledge to keep rates near zero through late 2014.

Source: Punch with Agency Reports