U.S. home prices rose 0.5%, month over month, and 5.4%, year over year, in May, reaching an average price of $159,000, according to Zillow.
The year-over-year increase is the second-highest annual rate of appreciation registered in the past 12 months, surpassed only by January's 5.6% year-over-year increase, the real estate data and analysis company reports.
Home values have risen or remained flat, month over month, for 19 straight months, according to Zillow. The company forecasts that home prices will rise another 4.1% from May 2013 to May 2014, reaching an average price of approximately $165,448.
With housing starts now on the rise and more sellers entering the market, inventories are expected to increase, which in turn will ease the supply crunch that caused the recent spike in prices. Rising interest rates are also expected to curb demand.
Dr. Stan Humphries, chief economist for Zillow, said ‘the housing market will undoubtedly look very different a few years down the road from how it appears now.’
‘While we believe the housing recovery will remain strong, home value appreciation will slow down, and buyers in it for the short term could get burned if they assume home values will continue rising as they have unabated,’ Humphries said in a release. ‘A home should always be looked at as a longer-term purchase, which will help cushion homeowners against volatile short-term swings in value.’