Stock traders work at the New York Stock Exchange, Monday, Feb. 4, 2013. (AP Photo/Mark Lennihan)
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Stock traders work at the New York Stock Exchange, Monday, Feb. 4, 2013. (AP Photo/Mark Lennihan)
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FILE - In this Thursday, Jan. 31, 2013 file photo, traders work on the floor of the New York Stock Exchange in New York. Going into Tuesday, Feb. 5, 2013, stock futures are heading higher after the biggest sell-off this year, with strong economic data coming out of Europe and the U.S. service industry expected to show further expansion, though at a slower pace. (AP Photo/Seth Wenig, File)
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FILE - This Wednesday, Oct. 10, 2012 file photo shows a for-sale sign at a home in Glenview, Ill. U.S. sales of previously occupied homes rose solidly in October, helped by improvement in the job market and record-low mortgage rates. (AP Photo/Nam Y. Huh, File)
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In this Thursday, Oct. 11, 2012, photo, Ford Smith works on a new home under construction in Chicago. Confidence among U.S. homebuilders rose in October to its highest level in six and a half years, driven by strong demand for newly built homes and growing optimism that the housing recovery will strengthen next year. (AP Photo/Nam Y. Huh)
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FILE - In this Thursday, Dec. 20, 2012, file photo, a sign hangs in North Andover, Mass. U.S. sales of previously occupied homes dipped in December from November, in part because of a limited supply of available homes. But for all of 2012, sales rose to their highest level in five years, (AP Photo/Elise Amendola, File)
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FILE -In this Friday, Nov. 16, 2012, file photo, President Barack Obama acknowledges House Speaker John Boehner of Ohio while speaking to reporters in the Roosevelt Room of the White House in Washington. U.S. stocks shook off their post-election slump Monday and recorded big gains as investors appeared more optimistic about a deal to avoid a federal budget crisis and were encouraged by a pair of corporate earnings reports. (AP Photo/Carolyn Kaster)
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FILE - In this Thursday, Nov. 22, 2012, file photo, a customer makes a purchase in the Times Square Toys-R-Us store in New York. U.S. retail sales rose 0.3 percent in November from October, the Commerce Department said Thursday. That offset a 0.3 percent decline in October from September. (AP Photo/John Minchillo, File)
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FILE - In this Oct. 28, 2012, file photo, Jessie Rivera, 10, of New York, brings pink sandbags to the door of the shop in New York. Americans cut back sharply on spending at retail businesses in October, an indication that some may still be cautious about the economy. Superstorm Sandy may have slowed business at the end of the month. The Commerce Department said Wednesday, Nov. 14, 2012, that sales dropped 0.3 percent after three months of gains. Auto sales fell 1.5 percent, the most in more than a year. (AP Photo/Craig Ruttle, File)
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In this Friday, Oct. 26, 2012, photo, people shop at a mall in Cheektowaga, N.Y., Friday, Oct. 26, 2012. Americans cut back sharply on spending at retail businesses in October, an indication that some may still be cautious about the economy. Superstorm Sandy may have slowed business at the end of the month. The Commerce Department said Wednesday, Nov. 14, 2012, that sales dropped 0.3 percent after three months of gains. Auto sales fell 1.5 percent, the most in more than a year.(AP Photo/David Duprey)
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FILE - In this Nov. 7, 2012, file photo, James Dresch of MND Partners Inc. works on the floor of the New York Stock Exchange in New York. Wall Street also appeared headed for gains on the open Wednesday Nov. 14, 2012 as renewed efforts got under way in Washington to resolve the impending "fiscal cliff." (AP Photo/Henny Ray Abrams, File)
US home prices rose last year by most in 6.5 years
WASHINGTON (
AP) — U.S. home prices jumped by the most in 6 ½ years in December, spurred by a low supply of available homes and rising demand.
Home prices rose 8.3 percent in December compared with a year earlier, according to a report Tuesday from CoreLogic, a real estate data provider. That is the biggest annual gain since May 2006. Prices rose last year in 46 of 50 states.
Home prices also increased 0.4 percent in December from the previous month. That's a healthy increase given that sales usually slow over the winter months.
Steady increases in prices are helping fuel the housing recovery. They're encouraging some people to sell homes and enticing would-be buyers to purchase homes before prices rise further.
Higher prices can also make homeowners feel wealthier. That can encourage more 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 will likely 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 more demand for houses and apartments. More people are moving out into their own homes after doubling up with friends and relatives in the recession.
At the same time, the number of previously occupied homes for sale has fallen to the lowest level in 11 years.
"All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery," said Anand Nallathambi, CEO of CoreLogic.
The states with the biggest price gains were Arizona, Nevada, Idaho, California and Hawaii. The four states where prices fell were Delaware, Illinois, New Jersey and Pennsylvania.
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.
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