By Diana Olick, CNBC Real Estate Reporter NEW YORK ( CNBC) -- Home prices rose, just barely, in the second quarter of this year annually for the first time since 2007, according to online real estate firm Zillow. That prompted the popular site to call a " bottom" to home prices nationally. The increase was a mere 0.2%, but in today's touch and go housing recovery, that was enough. Nearly one third of the 167 markets Zillow tracks in this survey saw annual price gains from a year ago. "After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values," said Zillow Chief Economist Dr. Stan Humphries. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own." Zillow's report, which compares prices of homes sold in the same neighborhood, also showed a stronger 2.1% gain quarter to quarter, which is the biggest uptick since 2005. The biggest price gains, however, are in the markets that saw the biggest price drops during the latest housing crash. Phoenix, for example, saw a 12% annual price gain on the Zillow index.
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"We were heavily into Phoenix early in the cycle. Those markets are heating up," said James Breitenstein, CEO of investment firm Landsmith in an interview on CNBC Monday. "We see a shift more to the east, states like North Carolina, Michigan, Florida." While home prices on the Zillow index are improving most in formerly distressed markets, like Miami, Orlando and much of California, they are still dropping in other non-distressed markets, like St. Louis (down 4% annually) Chicago (down 5.8% annually) and Philadelphia (down 3.5% annually). "Those people looking at current results and calling a bottom are being dangerously short-sighted," said Michael Feder, CEO of Radar Logic, a real estate data and analytics company. "Not only are the immediate signs inconclusive, but the broad dynamics are still quite scary. We think housing is still a short." Radar Logic sees price increases as well, but blames that on mild winter weather that temporarily boosted demand. This means there will be payback, or weakness in prices during the latter half of this year. And even without the weather hypothesis, they see further trouble ahead: "On the supply side, higher prices will entice financial institutions to sell more of their inventories of foreclosed homes and allow households that were previously unable to sell due to negative equity to put their homes on the market. As a result, the supply of homes for sale will increase, placing downward pressure on prices. On the demand side, rising prices could reduce investment buying," according to the Radar Logic report. Investors are driving much of the housing market today, anywhere from one third to one quarter of home sales. That makes these supposedly national price gains more precarious than ever, because they are based on a finite supply of distressed homes and that supply is dependent on the nation's big banks. First time home buyers, who should be 40% of the market, are barely making up one third, and millions of potential move-up buyers are trapped in their homes due to negative and near negative equity. --Written by Diana Olick at CNBC