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It’s been an impressive stretch for housing sales. More than five million homes were sold in May – more than 4 percent in just one month. The national median sale price for an existing home was $208,000 – more than 15 percent from a year ago. The market is so hot that sometimes 50 offers are made on a home.
But some predict another bubble, and the National Association of Realtors is calling it “unsustainable.”
"Some of the increases can be explained by the fact that it is recovering from an over-corrected situation," said Lawrence Yun, chief economist for the Realtors. "But with people's income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue."
(Read More: Homebuilders Slow New Construction, Raise Prices)
Prices of distressed homes are rising faster than traditional home prices in many of the markets that took a beating during the real estate meltdown, such as California, Arizona and Florida. These markets are also seeing the highest volume of home sales, therefore having an outsized effect on the national number.
(Read More: Homebuilder Confidence Soars)
"You can at least make an argument that part of the dramatic increase in median home prices can be attributed to the foreclosure discount evaporating. That suggests that overall home price increases may be slightly overstated," said Rick Sharga of Carrington Mortgage Holdings, a fund that has invested in distressed properties.
Also weighing on home prices are rising mortgage rates. May's existing home sales report from the Realtors represents closed sales, so contracts and interest rates would have been signed and locked in March or April, before rates began to rise.
Based on the change in mortgage rates from early May to today, the average buyer would have to pay 13 percent more in monthly payments, including taxes and insurance, according to Mark Hanson, a California-based analyst. They also have to earn 10 percent more in income to qualify for a loan based on a typical qualifying debt-to-income ratio of 45 percent.
"These are huge moves especially considering—when purchasing a house using a mortgage—most people buy based on 'monthly payment and the maximum allowable debt-to-income ratio.' This means first-timer share will fall even further. They are already at a multiyear low even with record-low rates," said Hanson.
(Read More: As Prices Rise, Banks Repossess More Homes)
First-time homebuyer participation was at just 29 percent, according to the Realtors, a five-year low. Without these buyers, as investors pull back and prices rise, home sales will likely lose steam. Next week’s report on pending home sales, or signed contracts in May, will tell just how much rising rates are impacting sales.
NBC's Tom Costello contributed to this report.