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Home prices up 5.5 percent in 20 major U.S. cities

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NEW YORK (CNNMoney) — Home prices in 20 major U.S. cities were up 5.5% in November compared to a year earlier, their biggest jump in more than six years.

The latest reading of the closely watched S&P Case-Shiller index is another sign of the growing recovery in the long-battered housing market.

The last time prices jumped this much was in August 2006, when the housing bubble was still inflating. Soon after that, prices went into a steep decline that led to a flood of foreclosures. That sparked the most serious economic downturn since the Great Depression.

“Housing is clearly recovering,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Prices are rising as are both new and existing home sales. These figures confirm that housing is contributing to economic growth.”

Housing prices have been helped by a number of factors in recent months, including increased sales of both new homes and previously-owned houses, a drop in foreclosures, and near record low mortgage rates. A drop in the nation’s unemployment rate also is helping

The rise in home prices is good news for more than just people hoping to sell their home. The higher prices rise, the fewer homeowners that will be underwater on their mortgage, meaning they owe more on their homes than they are worth. That can help many homeowners to refinance and save money, which would pump more cash into the economy.

The S&P Case-Shiller index tracks home prices in 20 major markets. The latest reading showed 19 of them posting a gain in prices, with only New York posting a modest decline from a year earlier. Phoenix, one of the markets hit hardest by the housing crisis, posted the biggest increase, with home prices there climbing 23%.

But even with November’s strong gains, the overall index stands 29% below the home price peak reached in the summer of 2006.