Median home prices continued to increase in the first quarter, rising the most annually in more than seven years, the National Association of Realtors said. 

In 133 out of 150 metropolitan statistical areas surveyed, the median existing single-family home price increased year-over-year when studying closings from the first quarter. Only 17 metros saw prices decline.

In the fourth quarter of 2012, a comparable 133 areas saw an annual increase, which was a great improvement from the first quarter of 2012, when prices were only higher in 74 metros. 

Lawrence Yun, NAR chief economist, said the supply and demand balance is tilted toward sellers in a good portion of the country.

"Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation," he said. 

According to Yun, if builders can continue to ramp up production, then home price growth is expected to moderate in 2014. 

At the end of the first quarter, there were 1.93 million existing homes for sale, a 16.8% drop from the close of the first quarter in 2012, which had 2.32 million homes on the market.

Year-over-year, the national median existing single-family home price was $176,600 in the first quarter, an 11.3% increase from $158,600 in the first quarter of 2012. This marks the strongest year-over-year price gain since the fourth quarter of 2005, which saw a 13.6% jump. 

"Some of the previously hard-hit markets like Phoenix, Sacramento and Miami continue to experience a dramatic turnaround, while a new set of areas like Atlanta, Minneapolis and Seattle have begun to show strong signs of upward momentum," Yun said. 

Total existing sales inched up 0.8% to a seasonally adjusted annual rate of 4.94 million in the first quarter, compared to 4.90 million in the fourth quarter. This was a 9.8% increase from the 4.50 million pace during the first quarter of 2012. Sales peaked in the fourth quarter of 2009, when they reached 4.95 million. This was a result of buyers responding to tax incentives, notes NAR.

NAR President Gary Thomas said conditions remain favorable for buyers.

"Even with rising home prices, there is still plenty of buying power in the market," Thomas said. "Historically low mortgage interest rates and home prices that remain well below their peak mean most buyers can purchase well within their means, assuming they meet ongoing stringent credit standards."