The competition for housing is heating up along with the summer temperatures and continuing to set new records.

The average house sold in May went under contract in just 37 days, that's the fastest reading since Redfin, a real estate brokerage, began tracking the market seven years ago. The previous record, set in April, was 40 days.

Homes are selling faster than ever because supply is tight and demand is high. The number of listings in May was nearly 11 percent lower than in May 2016, leaving just 2.7 months of supply — another record low in the Redfin report. As a reference point, the National Association of Realtors considers a six-month supply to be a balanced market between buyers and sellers.

Denver led the nation in fastest sales, with nearly half of its new listings going under contract in just six days. Seattle came in second at seven days, and Grand Rapids, Michigan, Portland, Oregon, and Omaha, Nebraska, rounded out the top five.

On the inventory side, Rochester, New York, had the largest decrease in supply of homes for sale, down nearly 36 percent compared with a year ago. Buffalo, New York, (-32 percent), San Jose, California, (-31 percent), and Seattle (-27 percent), also saw significant drops in inventory.

The tight supply is only pushing home prices higher. The median price of a home sold in May jumped 6.8 percent compared with a year ago. That is about triple the average income gains and may already be hurting sales, as affordability weakens.

"There is still a lot of momentum in home prices in many metros, not only on the coasts but also in places like Buffalo, Grand Rapids and Omaha," said Redfin's chief economist, Nela Richardson. "Strong local economic growth and burgeoning demand from older millennials are accelerating home-price growth in this very competitive, low-inventory, pre-summer market."

Richardson is not concerned about the latest hike in short-term interest rates by the Federal Reserve . Mortgage rates do not follow the Fed rate directly, but track the yield on the 10-year Treasury bond , which is at its lowest since the presidential election last November. Rates are expected to move higher at some point, as the central bank continues to shrink its balance sheet of mortgage-backed securities .

"If anything, it may motivate buyers to make their purchases sooner rather than later," she added.
The current interest rate on the popular 30-year fixed conforming loan is hovering just above 4 percent. If rates were to hit 5 percent, most homebuyers said they would not change their homebuying plans, according to a survey commissioned by Redfin last month. About a quarter of those surveyed said it would increase their urgency to buy, but rates at 5 percent would not change their plans to buy a home.