Home prices have found their floor for the most part and are even trending upward in certain markets, said Paul Diggle, property economist for Capital Economics.

Diggle said seasonal adjustments along with a high level of distressed home sales could be giving the misleading impression that home prices are strengthening in recent months. But he says even when accounting for these market distortions, "it appears that home prices have found a floor and, on some measures at least, are rising modestly."

Diggle points out that both the Case-Shiller and CoreLogic home price indices reported gains in February, March and April.

"Indeed annualized growth over that period was 6.2% and 10.9%, respectively, on the two indices—higher than our already above-consensus forecast for house prices to increase by 2% this year," Diggle said.

Diggle said it's possible for home prices to in fact grow further this year if a solution is found for the euro-zone crisis, leading to a loosening in global credit conditions.

However, with those issues unresolved, Diggle says Capital Economics will stick to its current forecast.

"The good news is that the year-over-year change in house prices has improved noticeably in recent months too," he added. "Case-Shiller house prices have gone from falling at a rate of 4.5% year-over-year early last year, to a more moderate 1.9% year-over-year now. Meanwhile, CoreLogic house prices actually rose by 1.1% year-over-year in April. In other words, the recent improvement in house prices, although not quite as strong as the headline numbers suggest, appears to be genuine."