* Home prices rise for 7th month in a row
* Home vacancy rate at lowest since 2005
* Stock markets closed in wake of storm
NEW YORK, Oct 30 (Reuters) - U.S. home prices gained further traction in August as some of the hardest hit regions continued to improve in the latest sign that the housing market is on the mend.
The S&P/Case Shiller composite index of 20 metropolitan areas released on Tuesday gained 0.5 percent on a seasonally adjusted basis, in line with economists' forecasts.
It was the seventh straight month of increases, extending the longest continuous string of gains since prices were boosted by a homebuyer tax credit in 2009 and 2010.
The stabilization in home prices this year, along with a rise in sales and tighter inventories, has pointed to a housing market that is finally turning the corner, six years after its far-reaching collapse.
The sector is expected to contribute to economic growth this year for the first time since 2005.
``The improvements we've seen are very sustainable and very solid,'' said Russell Price, senior economist at Ameriprise Financial in Detroit. ``They're on very firm footing in the housing market.''
Tuesday's data came as analysts were trying to assess the potential economic impact of a powerful storm that hit the eastern United States. Overall, the storm is not expected to deal lasting damage to the broader economy.
While the flooding and power outages will hit economic output in the short term, some of that will be made up before the end of the quarter, wrote Paul Ashworth, chief U.S. economist at Capital Economics.
``When we factor in the boost to GDP growth from the clean-up, the overall economic impact is likely to be very modest,'' Ashworth wrote.
The U.S. stock market was closed for a second day in a row.
LOCATION, LOCATION, LOCATION
Separate data showed the home vacancy rate, which measures empty properties and those for sale, fell to the lowest level since 2005 as demand for housing picked up.
The rate declined to 1.9 percent in the third quarter from 2.1 percent in the previous three months, a level not seen since the third quarter of 2005, the Commerce Department said.
The homeownership rate held steady at 65.5 percent, but was down from 66.3 percent a year earlier. The U.S. home ownership rate peaked at 69.2 percent in July 2004. Many potential homebuyers have been forced to rent, with access to mortgages tight and unemployment high.
On a non-seasonally adjusted basis, home prices gained 0.9 percent.
Prices in the 20 cities climbed 2 percent year over year, topping expectations for a 1.9 percent increase.
Compared to a year ago, prices in Phoenix surged 18.8 percent, the fourth month in a row the hard-hit city has seen double-digit yearly gains, the report said. Phoenix has been one of the standouts this year as prices have snapped back.
Prices in Las Vegas - also one of the more distressed areas in the years since the end of the housing boom - were up 0.9 percent compared to a year ago, the first annual increase since January 2007.
Of the 20 cities in the index, three saw a yearly decline in prices, with Atlanta faring the worst, down 6.1 percent.
That home price gains are becoming more widespread by region is an encouraging sign that both prices and activity in the housing sector are on a sustained trend higher, Barclays economist Peter Newland wrote.
Data on consumer confidence from the Conference Board had also been scheduled to be released on Tuesday but was pushed back to Nov. 1 in light of the storm.