In recent months, the residential housing market has seen an uptick in home values. However, that momentum is not expected to stay strong through the end of the year.
According to a report published by Standard & Poor's Rating Services, home prices may continue to increase in the summer, while dropping off at the end of 2012.
"We expect these drops to occur in tandem with new foreclosed properties reaching the market later this year," said credit analyst Erkan Erturk. "The U.S. economy is currently growing at too slow a pace to have an impact on the housing market, and we believe that certain economic factors, such as weak employment growth and the Euro debt crisis, could somewhat stymie the housing recovery."
The increase in home prices could potentially lead a housing price bubble in some of the hottest housing markets, Thomas Popik, research director for Campbell Surveys told CNBC. Rapid short-term price increases in Arizona, California and Nevada have been caused by strong demand.