The wealth effect from rising house prices may not be as effective as it once was in spurring the U.S. economy, Bloomberg reported.

Rather than using their properties as ATM machines to boost spending, homeowners increasingly are paying down the principal and shortening the maturities of their mortgages in a move Florida banker Rob Nunziata calls "forced savings." Cash-in refinancings -- in which borrowers invest more of their own money in the house -- outnumbered cash-outs by more than two-to-one in the fourth quarter, according to Freddie Mac (FMCC), Bloomberg said.

The wealth effect "is much smaller," said Amir Sufi, professor of finance at the University of Chicago Booth School of Business. He reckons that each dollar increase in housing wealth may yield as little as an extra cent in spending. That compares with a 3-to-5-cent estimate by economists prior to the recession.

Many homeowners are finding they can't refinance their mortgages because banks have tightened credit conditions so much they're not eligible for new loans. Most who can refinance are opting not to withdraw equity after the first nationwide decline in house prices since the Great Depression reminded them home values can fall as well as rise. Read more.