Zillow: Home Prices Continue Rising, But Pace Will Slow

Home prices rose annually and monthly in May, according to ""Zillow"":http://www.zillow.com/. In fact, 29 of the 30 largest metropolitan areas covered by Zillow's Home Value Index experienced rising prices over the 12-month period ending in May, and 15 of the 30 posted double-digit increases.

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Zillow expects prices will continue their upward trajectory in the short-run with a 4.1 percent increase over the following 12 months. However, as inventory increases and interest rates rise, ""some demand may also ebb,"" said Stan Humphries, Zillow's chief economist.

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These predictions prompted the economist to advise, ""Enjoy it while it lasts, because the housing market will undoubtedly look very different a few years down the road from how it appears now.""

Meanwhile, May's year-over-year double-digit increases were strongest in the western metros of Las Vegas(28 percent), Sacramento (26.1 percent), San Francisco (24.2 percent), San Jose (21.8 percent), and Phoenix (21.3 percent).

Monthly appreciation was not quite as dramatic as the monthly gains. Nationally, prices rose 0.5 percent, and the greatest increase across the 30 largest metros was a 1.7 percent rise in Sacramento. Las Vegas followed with a 1.3 percent increase, and Los Angeles fell in third place with a 1 percent gain over the month.

The share of home sales taken up by foreclosure resales declined 1.1 percentage points over the month, according to Zillow. Foreclosures made up 10.7 percent of May sales.

Zillow also reported foreclosure resales represented 10.7 percent of May home sales, down 3.8 percentage points from a year ago. Foreclosure liquidations were down to their lowest level since October 2007 last month, with 5.01 homes foreclosed out of every 10,000 homes, according to Zillow.