Home prices across the U.S. rose for the seventh straight month in December, and were also up in Seattle, a sign of price stability as the housing market continues its bumpy road to recovery.

The Standard & Poor’s/Case-Shiller 20-city home-price index released Tuesday rose 0.3 percent from November to December to a seasonally adjusted reading of 145.87.

In the Seattle market, which includes King, Snohomish and Pierce counties, the seasonally adjusted index was 148.37, up 0.2 percent from November and 0.8 percent from its bottom in September.

The 20-city index was off 3.1 percent for the year from December 2008, while in Seattle, prices were down 7.9 percent over that same period. But that was an improvement over the one-year drop of 10.6 percent from November 2008 to November 2009 in the Seattle area.

The national figure nearly matched analysts’ estimates that it would fall by 3.2 percent.

Only five of 20 cities in the index showed declines from November to December. The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.

Prices peaked a year later in Seattle. The index is down 22 percent since then.

Los Angeles and Phoenix posted the largest December price increases. The worst performer was Chicago with a 0.6 percent decline.

Rising prices are a key to the nation’s recovery because they make homeowners feel wealthier and more comfortable to spend money. Consumer spending accounts for more than two-thirds of all economic activity.

Price increases also help rebuild equity for homeowners who owe more on their mortgages than their properties are worth. Roughly one in three homeowners with a mortgage are in that position, according to Moody’s Economy.com.

The housing market is seeking stability as it bounces back from a four-year recession. Sales of previously occupied homes fell almost 17 percent in December, the largest monthly drop in 40-years of record-keeping, the National Association of Realtors said.

Data for January will be released Friday, with analysts forecasting a 1 percent rise.

Sales of newly built homes are expected to rise 5.3 percent in January, after declining sharply a month earlier. The Commerce Department will release new n Wednesday.

On a quarterly basis, U.S. home prices fell 2.5 percent compared with the fourth quarter of 2008.

The Case-Shiller indexes measure increases and decreases relative to prices in January 2000. The base reading is 100, so a reading of 150 would mean home prices rose 50 percent since the beginning of the index.

Seattle Times desk editor Bill Kossen and business reporter Eric Pryne contributed to this report.

We seem to be climbing out of the deepest part of the hole.   Median prices are rising and the trend seems to be continuing into 2010.  What have you seen or noticed in your neighborhood or city?