Prices for single-family homes climbed in 74% of U.S. cities in the first quarter, fewer than a year earlier, as the nation’s housing rebound cools.

The median transaction price rose from a year earlier in 125 of 170 metropolitan areas measured, the National Association of Realtors said in a report today. In the first quarter of last year, 89% of markets showed annual gains.

Housing demand has slowed in the past year as higher borrowing costs and price gains, fueled by tight inventory, reduce affordability. Completed purchases of previously owned homes fell for a third straight month in March to the slowest pace since July 2012, according to the Realtors group.

"The cooling rate of price growth is needed to preserve favorable housing affordability conditions in the future," Chief Economist Lawrence Yun said in the statement. "Limited inventory is creating unsustainable and unhealthy price growth in some large markets, notably on the West Coast."

The median price for an existing single-family house in the first quarter was $191,600, up 8.6% from a year earlier. Growth slowed from the last three months of 2013, when the median jumped 10.1%.

The best-performing areas were South Bend, Ind., and Naples, Fla., where median prices jumped 27%. Prices climbed about 23% in Las Vegas; Lansing, Mich.; Atlanta; and Riverside, Calif.

The areas with the biggest declines were Cumberland, Md., where prices fell 19% from a year earlier. Following was the Springfield area of Illinois, with a 15% drop.

About 22% of U.S. areas had double-digit gains in prices, down from 26% in the fourth quarter, according to the Chicago-based Realtors group.

Bloomberg News