Steep competition also pushed the median price of a home sold in March to $273,000, up 7.5 percent year over year. "At some point consumer budgets will stagger behind the fast pace of price appreciation," said Nela Richardson, Redfin's chief economist. "The combination of low inventory, high prices and strong competition will continually challenge first-time buyers this year and they are the cornerstone of the housing market."

Home sales jumped nearly 9 percent in March compared with March 2016, even as the number of homes for sale plunged 13 percent, according to a new report from Redfin, a national real estate firm. That demand dynamic further increased competition in the market, resulting in the fastest average sales pace since Redfin began tracking in 2010. The typical home went under contract in just 49 days, down from 60 days a year ago.

Homes are flying off the shelves this spring, as demand rises and supply continues to drop. Record high prices in some local markets are not thwarting hungry buyers, as they rush to take advantage of the lowest mortgage rates of the year.

Homebuilders are benefiting from the lack of supply of existing homes for sale. Mortgage applications to purchase a newly built home in March were up 6.7 percent compared with a year ago to the highest level since the Mortgage Bankers Association began tracking this metric in 2012.

"The pickup from a fairly modest February showing suggests that developers are finding ways to bring new product on line to help supplement otherwise low inventories of existing homes for sale in the U.S.," wrote Lynn Fisher, MBA's vice president of research and economics, in a monthly report.

The average loan application size for a newly built home was unchanged, which may indicate builders are trying to keep prices down in order to get more buyers in the door. The average loan size for existing homes reached the highest on record this month. This is a factor of both higher prices and a severe lack of inexpensive starter homes for sale.

In Washington, D.C., the median price of a home sold in March hit a new high for the month, as sales jumped 19 percent. Supply, however is still incredibly low. Half the homes sold in March were on the market for 12 days or less, according to the Greater Capital Area Association of Realtors.

In Charlotte, North Carolina, the story is much the same. The supply of homes for sale dropped 20 percent compared with March 2016, but sales rose 11.5 percent, according to The Charlotte Regional Realtor Association. It took 18 fewer days to sell a home compared with last year.

In Las Vegas, where foreclosures flooded the market less than a decade ago, home sales surged 15 percent compared with March 2016, and prices are now double what they were five years ago, according to the Greater Las Vegas Association of Realtors. This as the market has less than three months' supply of homes for sale. Six months' supply is considered a balanced market between buyer and seller.

"Combined with a tight supply, I think our home prices and home sales may continue to get a boost from the positive economic news we've been enjoying lately," said GLVAR's president, David Tina.

Tina points to the announcement that the Raiders will be moving to Las Vegas, solidifying its spot as an NFL city.

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