Consumers in the U.S. gained confidence in March as the gloom over job prospects began to lift, indicating employment will be central to preserving the recent acceleration in spending.

The Conference Board’s confidence index rose to 52.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 46.4 in February, according to figures today from the New York research group. Home prices unexpectedly rose in January for an eighth month, data also showed.

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“With signs of improvement in the labor market, confidence is more likely to be up than down in the next few months,” said James O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast sentiment would pick up. “It’s still a low level of confidence.”

Rising stock prices, a stabilizing housing market and fewer firings may be giving households hope that the recovery from the worst recession since the 1930s will be sustained. The 184,000 increase in payrolls economists project for this month shows it will take years for the economy to reverse the loss of 8.4 million jobs since the contraction began in December 2007.

Stocks rose on the improving economic outlook. The Dow Jones Industrial Average increased 11.6 points, or 0.1 percent, to close at 10,907.42. Standard & Poor’s 500 Index rose less than 0.1 percent to 1,173.27.

Economists forecast confidence would rise to 51 for the month from a previously reported 46, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from 46.6 to 59.

Confidence Averages

The measure averaged 45 in 2009, and 97 during the expansion that ended in December 2007.

Home prices in 20 U.S. cities rose 0.3 percent in January, indicating the housing market is stabilizing as the economy expands. The S&P/Case-Shiller home-price index climbed from the prior month on a seasonally adjusted basis after a similar gain in December.

Cheaper homes, low borrowing costs and government incentives have combined to support the housing market after its collapse helped trigger the recession.

“It’s a temporary stabilization,” said Joseph Brusuelas, president of Brusuelas Analytics in Stamford, Connecticut, who had forecast a month-over-month gain in the adjusted index. “Foreclosures are still going to bite the market. Given the preponderance of negative housing data, we may see another leg down.”

Data at Odds

The S&P/Case-Shiller figures are at odds with other measures that have shown property values are again softening. A gauge of national single-family home values issued by First American CoreLogic’s LoanPerformance unit, the figures tracked by the Federal Reserve, showed prices dropped 1.9 percent in January, the fourth decrease in five months.

The Conference Board’s measure of present conditions increased to 26, the highest level since May, from 21.7 in February. The gauge of expectations for the next six months rose to 70.2 from 62.9.

The share of consumers who said jobs are plentiful advanced to 4.4 percent from 4 percent. The proportion of people who said jobs are hard to get decreased to 45.8, the fewest since August.

More people also anticipated incomes and employment would improve in the next six months, the report showed.

“Despite this month’s increase, consumers continue to express concern about current business and labor market conditions,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement. “Overall, consumer confidence levels have not changed significantly since last spring.”

Spending Improves

Consumer spending in February rose for a fifth consecutive month, figures from the Commerce Department yesterday showed. Best Buy Co. and Nike Inc., which have reported higher-than- anticipated profits, are among companies that may keep benefitting as the emerging recovery gives Americans the confidence to buy.

Nike, the world’s largest maker of athletic shoes, said this month that third-quarter profit more than doubled as North America posted a sales increase for the first time in a year.

Best Buy, the largest U.S. electronics retailer, last week reported sales climbed after the Richfield, Minnesota-based company cut prices on flat-panel TVs and offered discounts during the holidays.

Fed Signals

Fed officials this month signaled the U.S. recovery isn’t strong enough to stoke inflation, reduce unemployment quickly or justify an end to record-low interest rates.

While the economy has “continued to strengthen,” policy makers said in a statement after their March 16 meeting that “employers remain reluctant to add to payrolls.”

The projected increase in payrolls this month, based on the median forecasts of economists surveyed, would be the biggest in three years.

Even so, the unemployment rate is projected to end the year at 9.5 percent, showing the labor market will continue to be a challenge to consumers this year, according to a survey of economists taken by Bloomberg earlier this month.