Inventory levels hovering at all-time lows weighed down home sales and fueled faster price appreciation during the first three months of the year, according to the latest quarterly report by the National Association of Realtors^®.

The national median existing single-family home price in the first quarter was $245,500, which is up 5.7% from the first quarter of 2017 ($232,200). The median sales price during the fourth quarter of 2017 climbed 5.3% from the fourth quarter of 2016.

Single-family home prices last quarter increased in 91% of measured markets, with 162 out of 178 metropolitan statistical areas (MSAs) showing sales price gains in the first quarter compared to a year ago. Fifty-three metro areas (30%) experienced double-digit increases, up from 15% in the fourth quarter of 2017.

Lawrence Yun, NAR chief economist, said record low inventory levels caused the housing market to get off to a slow start in 2018. “The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets,” he said. “Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds.”

Added Yun, “Realtors^® in areas with strong job markets report that consumer frustration is rising. Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.”

Total existing-home sales, including single family and condos, decreased 1.5% to a seasonally adjusted annual rate of 5.51 million in the first quarter from 5.59 million in the fourth quarter of 2017, and are 1.7% lower than the 5.60 million pace during the first quarter of 2017.

At the end of the first quarter, there were 1.67 million existing homes available for sale, which was 7.2% below the 1.80 million homes for sale at the end of the first quarter in 2017. The average supply during the first quarter was 3.5 months – down from 3.7 months in the first quarter of last year.

The national family median income rose to $74,779 in the first quarter, but overall affordability decreased from a year ago because of rising mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $55,732, a 10% down payment would require an income of $52,779, and $46,932 would be needed for a 20% down payment.

“Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018,” said Yun. “Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger paychecks following this year’s tax cuts. It’s simple: homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability.”

The five most expensive housing markets in the first quarter were the San Jose, California metro area, where the median existing single-family price was $1,373,000; San Francisco-Oakland-Hayward, California, $917,000; Anaheim-Santa Ana-Irvine, California, $810,000; urban Honolulu, $775,500; and San Diego-Carlsbad, $610,000.

The five lowest-cost metro areas in the first quarter were Decatur, Illinois, $73,000; Cumberland, Maryland, $86,200; Youngstown-Warren-Boardman, Ohio, $91,300; Elmira, New York, $100,800; and Binghamton, New York; $103,000.

Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $231,700 in the first quarter, up 5.9% from the first quarter of 2017 ($218,800). Eighty-five% of metro areas showed gains in their median condo price from a year ago.

Total existing-home sales in the Northeast slipped 8.5% in the first quarter and are 8.1% below the first quarter of 2017. The median existing single-family home price in the Northeast was $267,400 in the first quarter, up 4.6% from a year ago.

In the Midwest, existing-home sales fell 6.9% in the first quarter and are 1.8% below a year ago. The median existing single-family home price in the Midwest grew 5.9% to $187,100 in the first quarter from the same quarter a year ago.

Existing-home sales in the South increased 3.7% in the first quarter and are 0.7% higher than the first quarter of 2017. The median existing single-family home price in the South was $220,400 in the first quarter, 5.5% above a year earlier.

In the West, existing-home sales in the first quarter declined 1.1% and are 2.2% below a year ago. The median existing single-family home price in the West increased 8.2% to $371,300 in the first quarter from the first quarter of 2017.