House prices rose for the second time in three months as buyers were tempted to return to the market, figures have shown.

The increase of 1.2% during May slowed the annual rate at which property prices are falling from 15% to 11.3%, with the average price of a house now pushed up to £154,016. The cost of building a property has also increased overall. A fall of just 0.3% in April was offset by a rise of 1% in March, according to the figures published by Nationwide Building Society.

However, the building society's chief economist, Martin Gahbauer, said that now was not the time to predict that the house price correction was over, despite the conditions improving in the market over the last few months.

"Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively," said Mr Gahbauer. "During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.

"In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet," said Mr Gahbauer, who added that he believed any future falls in the prices of houses would be less dramatic than the drop in 2008.

House prices also continued to stage a recovery in the quarter-on-quarter rates, which are seen to be a less reactive way of measuring the trend of prices. To the end of the month of May, prices fell by 0.5%, compared to a drop of 3% to the end of the April.

The unprecedented level of interest rates and the affect that the recent slump has had on prices are thought to be the reason for the latest improvement. Nationwide said that sellers choosing to rent their property rather than sell it, or delaying putting their house up for sale, coupled with low building levels has left a shortage of homes, causing prices to rise.

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