The rate of annual home price appreciation rose again in May, offsetting the affordability gains from declining mortgage rates, according to CoreLogic.

May home prices increased nationally by 3.6% year-over-year and by 0.9% over a revised result for April; CoreLogic incorporates newly released public data and updates its findings each month.

CoreLogic HPI

Over the next 12 months, CoreLogic projects home prices will increase by 5.6% and by 0.8% on a shorter-term basis between May and June. June's single-family home values are expected to reach an all-time high.

"The recent and forecasted acceleration in home prices is a good and bad thing at the same time," Frank Martell, president and CEO of CoreLogic, said in a press release. "Higher prices and a lack of affordable homes are two of the most challenging issues in housing today, and every buyer, seller and industry participant is being impacted. The long-term solution lies in expanding supply, which will require aggressive and effective collaboration between policy makers, state and local government entities and home builders."

About 28% of respondents to a first-quarter CoreLogic consumer survey voiced concern with affording a new home in the future, while 40% said they could not buy a home in their desired market.

"Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May," said Frank Nothaft, chief economist at CoreLogic. "This has been a shot-in-the-arm for home sales. Sales gained momentum in May and annual home-price growth accelerated for the first time since March 2018."

Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 38% were overvalued in May, while 24% were undervalued and 38% were at value. When cut down to the top 50 largest MSAs, 42% were overvalued, just 16% were undervalued and 42% were at value.

For the second month in a row, Idaho was the only state with double-digit annual price growth, up 10.7%. It was followed by Utah at 7.8% and South Dakota at 7.7%. North Dakota continued its run of annual price depreciation, down 1.7%. Delaware at 0.1% and Connecticut at 0.3% were the next smallest home price appreciations in May.