U.S. house prices rose 7.3 percent in the year through May as buyers competed for a small supply of listings, according to the Federal Housing Finance Agency.

Prices increased 0.7 percent on a seasonally adjusted basis from April, the FHFA said in a report today from Washington. The average economist estimate was for a 0.8 percent gain, according to data compiled by Bloomberg.

Real estate values are climbing as improving employment helps draw buyers into the market for a tight inventory of homes. A separate report from Zillow Inc. showed U.S. home values rose 2.4 percent in the second quarter from the previous three months. It was the biggest gain for a second quarter since 2004, the Seattle-based property-research company said.

“The U.S. housing market as a whole is currently not experiencing a bubble, but in many places it sure must feel like one,” Zillow Senior Economist Svenja Gudell said in a statement. “Homeowners are feeling a sense of whiplash after years of depreciation.”

The limited supply and higher mortgage rates may be restraining purchases. Sales of previously owned homes unexpectedly slipped 1.2 percent in June to 5.08 million annualized rate, the National Association of Realtors reported. The number of properties on the market last month was the fewest for any June since 2001.

Regional Gains

The average rate for a 30-year fixed loan was 4.37 percent last week, up from a near-record low of 3.35 percent in May, according to Freddie Mac.

The FHFA’s report showed prices increased 15.8 percent from a year earlier in the Pacific area, which includes California and Oregon. In the Mountain region, including Nevada and Arizona, the gain was 12.7 percent. The East South Central area, including Kentucky and Alabama, had the smallest increase, at 2.7 percent.

The FHFA index measures transactions for single-family properties financed with mortgages owned or securitized by Fannie Mae and Freddie Mac. The gauge is 11.2 percent below its April 2007 peak.