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Home prices in the United States increased by 8.8% year on year in May and are expected to rise 6% in the next 12 months, according to the latest index data from property analysis firm CoreLogic.

Prices have now increased year on year for 27 months in a row. The data also shows that month on month prices were up 1.4% in May compared with April.

No states saw prices fall in May 2014 and 25 states and the District of Columbia were at or within 10% of their peak home price appreciation.

New highs were recorded in Alaska, Louisiana, Oklahoma, Nebraska, Iowa, South Dakota, North Dakota, Colorado, Texas and New York. The strongest year on year appreciation was in the West, led by Hawaii, California and Nevada.

Excluding distressed sales, home prices nationally increased 8.1% in May 2014 compared to May 2013 and 1.2% month on month compared to April 2014. Also excluding distressed sales, all 50 states and the District of Columbia showed year on year home price appreciation in May. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic HPI Forecast indicates that home prices, including distressed sales, are projected to increase 0.8% month on month from May 2014 to June 2014 and 6% year on year.

Excluding distressed sales, home prices are expected to rise 0.7% month on month from May 2014 to June 2014 and by 5.1% year on year.

The CoreLogic HPI Forecast is a monthly projection of home prices built on the CoreLogic HPI and other economic variables. Values are derived from state level forecasts by weighting indices according to the number of owner occupied households for each state.

‘The pace of home price appreciation is cooling off quickly as the weather warms up. May's 8.8% year on year growth rate is down almost 3% from just three months ago,’ said Mark Fleming, chief economist for CoreLogic.

‘The influences of modestly rising inventory and less than expected demand are causing price growth to moderate toward our forecasted expectations,’ he added.

The fact that home prices are continuing to climb across most of the country has both positive and negative implications for the housing market, according to Anand Nallathambi, president and chief executive officer of CoreLogic.

‘While the rapid rise in prices over the past two years has lifted many home owners out of negative equity, it has also become a negative factor in buying decisions for prospective purchasers weighing affordability concerns. As we move ahead, a moderation in home price increases over the next 12 months should help cool things down a bit and keep the housing recovery going,’ he explained.

This article was republished with permission from Property Wire.