Home prices rose 8.3 percent in December from a year earlier, according to a report Tuesday from real estate data provider CoreLogic. That is the biggest gain since May 2006. Prices rose last year in 46 of 50 states.
Home prices also rose 0.4 percent in December from November. That’s a healthy increase given that sales usually slow over winter.
Steady increases in prices are helping fuel the housing recovery. They’re encouraging some people to sell homes and enticing would-be buyers to make purchases before prices rise further.
Higher prices can also make homeowners feel wealthier, which can encourage consumer spending.
Most economists expect prices to keep rising this year. Sales of previously occupied homes reached their highest level in five years in 2012 and likely will keep growing. Homebuilders, encouraged by rising interest from customers, broke ground on the most new homes and apartments in four years last year.
Ultra-low mortgage rates and steady job gains have fueled demand for housing. More people are moving into their own homes after staying with friends and relatives in the recession. The number of previously occupied homes for sale has fallen to the lowest level in 11 years.
The states with the biggest price gains were Arizona, Nevada, Idaho, California and Hawaii. The states where prices fell were Delaware, Illinois, New Jersey and Pennsylvania.
“All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery,” said Anand Nallathambi, CEO of CoreLogic.
The housing recovery is also boosting job creation. Construction companies have added 98,000 jobs in the past four months, the best hiring spree since the bubble burst in 2006. Economists forecast even more could be added this year.
Housing has been a leading driver of past recoveries. But the bursting of the housing bubble pushed a flood of foreclosed homes on the market at low prices. That made it hard for builders to compete.
And a collapse in home prices left millions of homeowners owing more on their mortgages than their houses were worth. That made it difficult to sell.
Now, six years after the bubble burst, those barriers are fading. Some economists forecast that housing could add a point or more to economic growth this year.