"The gains achieved in 2015 were driven primarily by exceptional market fundamentals, strong job growth, improving income and wages, solid demographic growth and, of course, very favorable mortgage rates," said the report's author, James Wood, Ivory-Boyer senior fellow at the Kem C. Gardner Policy Institute at the University of Utah.

He said local market fundamentals and conditions will likely continue to be favorable for the area real estate market in 2016.

The strong demand for housing was not limited to single-family homes, Wood noted. The sale of multifamily units such as condominiums, town houses and twin homes set an all-time record of 3,800 units and accounted for 22 percent of all residential sales last year — the highest share ever. The value of multifamily units sold last year was $774 million — an increase of 36 percent above the prior year, the report states.

Wood said the recent rise in housing prices also benefited homeowners with underwater mortgages. In 2010, 21 percent of all home mortgages in Utah — about 80,000 homeowners — had negative equity, owing more than their home was worth, he said. However, the number of homeowners with negative equity has now dropped to around 4 percent of all home mortgages, or 15,000 households, which has put upward pressure on prices.

Affordability Factor

Meanwhile, the market has maintained a relatively high affordability factor, according to the report. In 2014, the median household income in Salt Lake County was about $63,000. Assuming a household with a median income devoted 30 percent of their income to a mortgage payment — including taxes and insurance — that household could carry a mortgage of about $290,000.

Last year, approximately 56 percent of the single-family homes sold in the county were priced under that amount.

Economists have predicted interest rates moving between 4 percent and 5 percent this year, said Cheryl Acker, president of the Salt Lake Board of Realtors. For 2016, the Salt Lake Board of Realtors predicts that total countywide residential home sales will surpass 19,000 units sold — an 11 percent increase over last year.

Prices

With demand for housing continuing to outpace available inventory, the price of a single-family home will rise 5 percent to 7 percent this year to a median price of $290,000, the report states. The price of a multifamily home is expected to increase to a median value of 8 percent to 10 percent to around $205,000.

"There is still room for moderate house-price increases provided mortgage rate increases are gradual," Acker said. "In Salt Lake County, housing prices over the past 15 years have increased at about 1.8 percent annually in inflation-adjusted dollars."