A monthly rise in US home prices lifted hopes that the stricken residential real estate market could be starting to stabilise after three years of spiralling downward.

The Federal Housing Finance Agency said on Wednesday that single-family home prices rose by 0.9 per cent from April to May, marking the biggest jump this year. Compared with a year ago, US home prices were off by 5.6 per cent, the smallest annual decline in 10 months.