"People are expecting four bedrooms, two bathrooms and a double garage.
"There's less of the cheaper properties sold."
According to REINZ, 83 houses sold in Rotorua last month, up from 67 last May.
Nationally, house sales in May reached their best levels for the month since 2007.
Auckland and Canterbury's buoyant property markets continued to lead the way - with both regions posting record high median sales prices.
Auckland hit $565,000 for the month and the Canterbury/Westland region registered $360,000.
REINZ chief executive Helen O'Sullivan said the national median house price rose $23,000 in the 12 months to May to reach $392,000 - $8000 below the record median set in March.
And while price gains in other centres have been modest, sales in the Nelson/Marlborough region also set a new median high of $353,625, figures showed.
Auckland's property market - which Ms O'Sullivan said was "driving up house prices at both the regional and national level" - and strong demand in Canterbury continues to cause headaches for financial policy makers.
The Reserve Bank's monetary policy statement, issued Thursday, stated Kiwi house prices had increased nationally by 9 per cent between the April 2012 and 2013 quarters.
This was driven by homes in Christchurch and Auckland, which rose in price by 11 and 14 per cent respectively.
"Outside these areas, prices rose by an average of around 4 per cent, although there is considerable variation among districts."
Despite this, the central bank confirmed interest rates were likely to remain on hold for the rest of the year - but signalled it would hike rates if rising house prices spurred a property bubble.
Other data from the REINZ report showed the total value of residential sales was $3.78 billion in May.
A breakdown of the 7714 properties sold for the month showed about half were valued under $400,000.
Just over a quarter fetched between $400,000 and $599,999 and about 18 per cent between $600,000 and $999,999. The remaining 5 per cent topped the $1 million mark.