Prices in more than half of major metropolitan markets with available data are now at or above their previous price peaks after what the National Association of Realtors® (NAR) calls the best quarterly sales pace of the year.  Existing home sales in the fourth quarter of 2016 brought housing inventories to record lows and helped to push single family prices higher.  NAR reports that the median price of a single family home increased year-over-year in 89 percent of the 178 metropolitan markets it tracks. Only 20 metro areas, 11 percent, had median prices below those of a year earlier.

The number of rising markets exceeded those in the third quarter by 2 percentage points and the number of metro areas with double-digit price gains increased from 31 or 14 percent to 17 percent.  Of the 150 markets which NAR has tracked since before the housing crisis, 78 (or 52 percent) now have a median sales price at or above their previous all-time highs.

Lawrence Yun, NAR chief economist, says home-price gains didn't let up throughout 2016.  "Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment," he said. "At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market."

"Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions."

NAR says there was a 5.7 percent annual increase in the national median existing single-family home price, rising from $222,300 in the fourth quarter of 2015 to $235,000.  The year-over-year gain in the third quarter was 5.4 percent.

The existing home inventory of 1.65 million homes for sale at the end of the year was 6.3 percent below the inventory of 1.76 million homes a year earlier and the lowest supply since NAR began tracking it in 1999.  At the present rate of sales, that is estimated to be a 3.9-month supply.  A year earlier there was a 4.6-month supply.

Given the current shortage of homes for sale and the potential for rising interest rates, NAR President William E. Brown is advising homebuyers to get a jump on the spring market. "There are fewer listings on the market, but also a little less competition than what's expected this spring. Buyers may find just the home they're looking for at a good price and without the possibility of having to outbid others."

Prices for condo and cooperatives, reported for 61 metro areas, increased 6.1 percent in the fourth quarter compared to a year earlier, from $209,300 to $222,000.  Median condo prices were higher in 93 percent of the markets covered by NAR.