By Diana Olick, CNBC Real Estate Reporter
NEW YORK (
) -- For the first time in over six months, the supply of homes for sale is beginning to rise.
While inventories are still down nearly 20% from a year ago, they did rise more than the seasonal norm in February from January, according to a new report from the National Association of Realtors.
The raw number of for-sale listings rose 10% month-to-month, and when seasonally adjusted, they were up 2.6%, the biggest jump in over two years.
"Tight inventory has been a critical issue for the housing market: The limited supply of homes has fueled bidding wars and has meant that buyers have little to choose from and agents have little to sell," said Trulia.com's Jed Kolko. "Inventory has been tightening because construction levels are still low, adding little new housing stock, and homeowners are waiting to sell until they have more positive equity. This inventory spiral been especially severe since prices bottomed."
Tight supply has pushed the nation's home builders to ramp up production far faster than they expected. That has increased costs, as they must now pay more for less available labor and for materials. Miami-based Lennar this week reported a 34% jump in new orders.
"We've been producing homes at about 5-600,000 a year, we probably need a 1.25 million to keep up with normalized household production and population growth," Lennar CEO Stuart Miller told CNBC. "There's no question we are in recovery."
So the increase in supply is welcome news, as the severe lack of homes for sale has been pushing home prices higher far faster than anyone expected. That swift jump in prices, along with low supply, have been hampering sales, which were up just 0.8% month-to-month in February, missing analysts' expectations. Single-family home sales were actually weaker, while condo sales jumped nearly nine percent from January.
"Rapid price appreciation is not good news for home buyers," said Lawrence Yun, chief economist for the NAR. "Wages are up just 2-3 percent, while prices are rising 4-5 times that."