U.S. home prices rose 2.6 percent in May from April, and they were up 12.2 percent compared to the year-ago period, the biggest year-over-year increase since February 2006 and the 15th consecutive monthly increase in home prices nationally, data firm CoreLogic (NYSE: CLGX) said Tuesday. The increase suggests the housing recovery is strengthening.

Excluding distressed sales -- typically foreclosures or short sales -- home prices were up 11.6 percent on a yearly basis.

"Across the country, pent up demand and continued low interest rates are fueling strong demand for a limited inventory of properties," Anand Nallathambi, president and CEO of CoreLogic said in a statement. "We expect that trend to continue to drive up prices throughout the balance of the summer months."

The report forecast prices will rise by another 2.9 percent in June for a yearly gain of 13.2 percent.

Capital Economics’ Paul Diggle said in a note that the national housing market is still in rebound, not bubble, mode. But he doubts that house prices can continue to race ahead at double-digit rates in the medium term.

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According to Diggle, the tide has turned for housing supply -- there were 200,000 more homes for sale in May relative to January, and the months’ supply of unsold stock has ticked up from a low of 4.7. Looser supply conditions will take some of the heat out of price rises. At the margins, higher mortgage interest rates will also help to moderate price gains -- 30-year rates averaged 3.7 percent in May, but are up at 4.5 percent now.

“A slower pace of price rises would be no bad thing,” Diggle said. “If double-digit price gains became a permanent feature of the recovery, bubble fears would start to look a whole lot more justified.”

There’s no reason why housing starts and new home sales -- the channel through which housing makes most of its contribution to gross domestic product -- can’t continue posting rapid increases alongside a more modest pace of price gains.

Shares of several homebuilders including Lennar Corp. (NYSE: LEN) and Ryland Group (NYSE: RYL) rose in pre-market trading.