Investors should be "cautious" about buying U.S. home-loan bonds because a rally stoked by cash "spilling in from the sidelines" may fizzle within months, according to Barclays Capital Inc.

This is a danger partly because the housing slump has not eased as much as suggested by home-price data, analysts at the bank, including Ajay Rajadhyaksha and Glenn Boyd, wrote in a report published Friday. While an S&P/Case-Shiller index for May showed the first month-over-month price increase since 2006 and a 2% seasonally adjusted annualized drop, a more accurate reading probably would have been an annualized decline of 10% to 15%, they wrote.

"Absent a sustained improvement in home prices, we do not see any change in the fundamental outcome for residential credit defaults and losses," the New York-based analysts wrote in the report.

Even seasonally adjusted home-price data has been skewed higher during the spring months of this year and last year by an "amplified" version of typical patterns, according to the analysts. More homeowners sell their properties during those months, cutting the share of foreclosed homes being offloaded at distress prices, as new buyers focus on "desirable neighborhoods" where values hold up better, they said.

Data reflecting a reversal of the seasonal benefit, as well as "a tide of new foreclosure sales" as a moratorium on the seizing of homes put in place by banks subsides, will lead to "renewed weakness" in the fall, they said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.