For the third month in a row, home prices posted both yearly and monthly gains, according to CoreLogic’s May Home Price Index (HPI) report.

When including distressed sales, home prices increased 2 percent in May from a year ago and rose 1.8 percent month-over-month.

When excluding distressed sales, prices made even greater strides, with the year-over-year increase at 2.7 percent and month-over-month increase at 2.3 percent. Distressed sales include short sales and REO transactions.

“The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle,” said Anand Nallathambi, president and CEO of CoreLogic. “Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix.”

The CoreLogic Pending HPI points to another monthly gain in June. Prices should increase next month by 1.4 percent when including distressed sales, and when excluding distressed sales, prices are expected to rise by 2 percent.

Mark Fleming, chief economist for CoreLogic, explained that much of the home price appreciation seen is due to the lower-priced segment of the market, which is rebounding more quickly than in the upper end.

“Home prices below 75 percent of the national median increased 5.7 percent from a year ago, compared to only a 1.8 percent increase for prices 125 percent or more of the median,” said Fleming.

When including distressed sales, the five states with the greatest increases were Arizona (+12.0 percent), Idaho (+9.2 percent), South Dakota (+8.7 percent), Montana (+8.2 percent) and Michigan (+7.9 percent). The states that posted the greatest losses were Delaware (-9.0 percent), Rhode Island (-4.4 percent), Illinois (-4.2 percent), Alabama (-4.1 percent) and Georgia (-4.0 percent).

When excluding distressed sales, Montana (+9.1 percent) posted the greatest gain, followed by South Dakota (+8.5 percent), Arizona (+7.3 percent), Idaho (+6.6 percent), and Wyoming (+6.6 percent). On the other hand, Delaware saw prices decrease by -7.8 percent, with Rhode Island (-3.8 percent), Alabama (-2.8 percent), Connecticut (-2.2 percent), and Kentucky (-1.2 percent) also posting losses.

The number of Core Based Statistical Areas (CBSAs) reporting price declines is shrinking, with 29 out of 100 seeing losses in May compared to 41 in April.

Phoenix saw prices appreciate the most when including and excluding distressed sales with gains of 14.7 percent and 10 percent, respectively. Houston, Washington D.C., Dallas, and Philadelphia all saw gains of at least 2 percent when including and excluding distressed sales.

Headquartered in Santa Ana, California, CoreLogic is a provider of information, analytics and business services.