By Diana Olick, CNBC Real Estate Reporter NEW YORK ( CNBC) -- 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."
| More from CNBC Tracking the US Real Estate Recovery |
What's Social Buzz Worth? Twitter & Coke Weigh In
Best Buy Shares Could Double: Analyst
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.