Rising demand for homes has cut into the supply, which is already low because many sellers -- especially those with negative equity -- are waiting for prices to increase before putting properties on the market.

About 2.43 million existing homes were listed for sale in February, the fewest for the month since 2005, the year U.S. home sales reached a record 7.08 million, the National Association of Realtors reported March 21. The number of listings rose by 100,000 from January, a seasonal bump that occurred every February since 2000 except for 2008, according to data collected by the Realtors.

The February supply of unsold homes listed for sale was down almost 50 percent from a year earlier in markets such as Miami, Phoenix and Oakland, California, according to Realtor.com, the National Association of Realtors' official website.

The U.S. inventory of new homes stood at 150,000, a 5.8- month supply, in February, when new houses sold at an annual pace of 313,000, slower than analysts expected, the Census Bureau reported March 23.

The supply of new houses rose from 5.7 months in January "as builders put inventory in place for the spring selling season," Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, wrote in a note to investors. "This is the fourth consecutive month inventory has remained below six months' supply, which is broadly considered supply/demand equilibrium."

The new-home supply peaked at 12.1 months in January 2009, forcing builders to book losses as the economy fell into recession. While the inventory has declined from that high, the housing market still has hurdles to overcome.

Negative Equity

One hurdle for the residential market is the more than 11 million homes that had negative equity at the end of 2011, meaning more is owed on the mortgage than the house is worth, preventing owners from trying to market their properties, according to CoreLogic.

"A big issue is underwater borrowers," said Sam Khater, senior economist for CoreLogic Inc., a real estate data provider based in Santa Ana, California. "If they want to move, they're not flexible with their price. The lowest they can sell at is their mortgage amount. So there's price stickiness."

In a sign that demand for new homes remains weak, orders fell 8 percent from a year earlier for the quarter ended Feb. 29 at KB Home, a Los Angeles-based builder that targets first-time buyers.

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