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Finally: Supply of Homes for Sale Begins to Rise

With the increase in supplies came a return of all-cash investors, who had been moving out of the market, causing sales of homes on the low end to plummet. Investors made up 22% of home buyers in February, according to the Realtors, up from 19% in January. All-cash sales hit 32%, up from 28%, and distressed home sales also increased to 25% of all sales, from 23%.

Low inventory has kept first-time home buyers, who largely seek lower-priced homes, out of the market. Newlyweds Brian and Ali Earle have been looking for a home in Northern Virginia for almost a year.

"There's not a lot out there," Brian said. "It's actually amazing. We see houses go under contract in a day or two, and so we really have to be on top of the game and be willing to drop everything and run and go check out a house, or it'll be gone."

Brian and Ali are qualified for a mortgage, but many sellers today still favor the all-cash deal. That puts them at even more of a disadvantage.

"Everywhere we've looked there are at least five or six offers going in within a 48 hour period," Ali said. "It's a little stressful."

Faced with competition from cash-heavy investors for, first-timers represented just 30% of buyers in February, compared to a more normal 40% historically.

-- Written by Diana Olick for CNBC.
CNBC is a world leader in business news, providing real-time financial market coverage and business information.
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