House prices rose 0.5% in May following a 0.9% jump in April, according to the Federal Housing Finance Agency house price index, which has posted price increases over the past four consecutive months.
The FHFA index — based on Fannie Mae and Freddie Mac purchase mortgage loans — is down 1.2% from a year ago.
Moody's Analytics chief economist Mark Zandi expects home prices will decline over the next few quarters due to a pickup in short sales and foreclosure auctions.
Speaking at a U.S. Chamber of Commerce forum, Zandi said he expects 2 million seriously delinquent loans will be pushed through the foreclosure process over the next 12 to 18 months.
The pick up in distressed sales and weak non-distressed sales in the wake of the expiration of the homebuyers' tax credit will lead to "price weakness over the next couple of quarters," he said.
