Existing home sales prices increased on an annual basis by the most in eight quarters as new listings failed to keep up with the surge in demand, the National Association of Realtors said.

There was a 6.9% year-over-year increase in the first-quarter national median existing home sales price to $232,100 from $217,209 one year prior. This was the largest since the second quarter of 2015, when prices rose 8.2% over the previous year.

Continual supply shortages ignited faster price appreciation across the country in the first quarter.

"Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter.

"Those able to successfully buy most likely had to outbid others — especially for those in the starter-home market — which in turn quickened price growth to the fastest quarterly pace in almost two years," said NAR Chief Economist Lawrence Yun in a press release.

Prices increased in 152 of the 178 metro areas NAR tracked, while 25 areas had a lower median price.

"Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. This is why many of these areas — in particular several parts of the South and West — are seeing unhealthy price appreciation that far exceeds incomes," said Yun.

At the end of the first quarter, there were 1.83 million existing homes available for sale, 6.6% below the 1.96 million homes for sale on March 31, 2016. The average supply during the first quarter was 3.7 months, down from 4.2 months in the first quarter of last year.

"High demand is poised to continue heading into the summer as long as job gains continue. However, many metro areas need to see a significant rise in new and existing inventory to meet this demand and cool down price growth," Yun added.

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