Despite a healthier economy, growing household income was not enough to make an impact on home sales as the market still suffers from historically low levels of inventory.

House values, facing upward pressure from tight supply, grew in 91% of measured metropolitan statistical areas, with 53 cities seeing double-digit increases in the annual home price appreciation rate for the first quarter, according to the National Association of Realtors' Metro Home Price report.

"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," Lawrence Yun, NAR chief economist, said in a press release.

"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," he continued.

NAR home prices

The national median home price for existing single-family homes hit $245,500 in the first quarter, a 5.7% increase from the first quarter of 2017 when it was $232,200.

Existing homes on the market fell 7.2% to 1.67 million homes for sale by the end of the first quarter, down from 1.8 million available existing homes during the same period a year ago.

The median household income rose to $74,779, but rising home prices and mortgage rates still limited consumer purchasing power.

"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," said Yun.

"It's simple: homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability," he added.

While creating more housing inventory would certainly help grow supply, it may not be all that simple as homebuilders are still plagued by labor and land shortages, rising costs to build and challenging regulatory guidelines.

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