Definitely a dearth in my area. Houses in my neighborhood are under contract quicker than I've ever seen.

A "the sky is falling" story once again, based on only one month of statistics. This story is so full of contradictions.

"Nationally, the number of homes for sale had fallen 40 percent since 2012, Trulia, the San Francisco-based real estate search engine, reported Monday."

Probably because the banks have finally gotten through the bulk of the financial crash foreclosures and short sales. I see this as a good thing. Finally a much more balanced market.

"A shortage of for-sale inventory again threatens to derail the full recovery of the residential real estate market"

But there is a huge difference of the home shortage between 2008 and now... then, it was because of relaxed lending criteria, which caused unsustainable appreciation in a false market.

"Low inventory of homes was a contributing factor in the 7.1 percent decline in national sales in February from January's levels after six positive months, the Realtors group said. Still, the numbers were 2.2 percent higher than February 2015 levels."

The #s for feb. 2016 vs. Feb. 2015 is the real story, if there even is a story.

"Although monthly sales reports are rarely a consistent indicator of the long-term health of the housing market..."

Then why write a full feature story about this exact thing?"Though the Realtors group's chief economist, Lawrence Yun, also coupled the inventory shortgage with "an affordability problem - prices are rising in other areas of the country"

How does one couple an inventory shortage with an affordability issue?

"however, that "the inventory shortage has not translated into any significant amount of [price] appreciation."

So, then, is there really a shortage? How can a free market have a severe shortage of supply and an overabundance of demand and no upward pressure on prices?

Price is not just a reflection of supply and demand. Sellers price their house to be able to pay off their loans and hopefully recoup their equity and investment, as well as to be able to afford to move to wherever they are heading. Buyers can only offer what they can afford, based on their income, assets, and credit. What we have now is a gap between what sellers can accept and buyers can afford. There is no point putting a house on the market when there is no market for it.

Price is not just a reflection of supply and demand. Sellers price their house to be able to pay off their loans and hopefully recoup their equity and investment, as well as to be able to afford to move to wherever they are heading. Buyers can only offer what they can afford, based on their income, assets, and credit. What we have now is a gap between what sellers can accept and buyers can afford. There is no point putting a house on the market when there is no market for it.

There is a name for the phenomenon you described... It is called supply and demand. You just perfectly described the way supply and demand works to move certain segments of the market.

You didn't describe a supply side shortage, not being able to sell your house for what you need to get out of it would create a demand side shortage and a supply side surplus that would drive prices down. Much of the country is seeing a lack of supply that should drive prices up. I find it far more likely that some of the most demanded market segments are simply slowing down because people are happy with their home. As prices rise those people will take advantage of the equity to move up which should smooth things out again. I personally believe some of this is appraisal problems. Appraisers are still being very conservative which is acting to keep prices down.

Lack of inventory is an issue here in WNY. I sold my farm recently and then had to find something to purchase in one of the Buffalo suburbs. Last summer/fall I wasn't concerned with finding something to buy since there were plenty of properties on the market that would have suited me. Totally different story right now, I ended up putting a non-contingent offer on a house that already had a contingent offer and was able to bump the other buyers since they hadn't been able to sell their house in Boston, MA. Thankfully, it worked out for me.

So what happened to all the houses that were on the market last year? Were they bought up or withdrawn?

At least in our area of PA, housing still hasn't rebounded close to the 2005-2008 levels. If you bought in 2012-2013 you are golden, but frankly lots of people are just sitting on their houses. Unwilling to take the hit (for instance, nicer new houses in our area were selling for around $300k in 2005, now those homes are selling for $250k in 2016), people just aren't selling. Also since many have refinanced already, moving now would most likely include taking on a higher interest rate than you currently have. Only people in my area selling are those that have to move. I want to build a new home, but it's making things very hard. Would have to take a hit to equity to sell my 11 year old house, which is caught up in the above scenario, and also can't get new construction to appraise for anywhere near cost to build, since housing prices are still artificially depressed here from lousy appraisals.

kitasei - if you are asking me that question, they were mostly bought, a few withdrawn.

Houses under $400k in my town are snatched up within a day or two. Under $250k are gone before the ink is dry on the listing agreement (if the house even makes it that far). The higher end homes (say in the $500 - $800k range) are taking a month or six weeks. Above that, it's anyone's guess -- some seem to sit for months, other listings come and go quickly.

When we were looking two years ago, the realtor told us there was a shortage on the market. It hasn't gotten any better since then, although some houses still sit for months.

Market supply is down nationally. Several causes

(1) Paucity of homes priced to sell to the median income household (hint: $50K - not $100++++K incomes). Nothing being built in that range.

Nothing being built for those under $100K incomes so they can't sell and buy a new house just a wee bit larger. They can't find anything to buy so they don't sell the one they have.

(2) Excessive supply of very upscale houses with over 3000 sq ft priced for the top 10% incomes (all those over $125,000 or more incomes).

In my county this has been going on for 3+ years. 11% of the houses are priced under $225,000 -with a median county household income of $54,000. 29% are between $225,000 - 450,000. 60% are that $500,000 ----- $3,000,000.

New construction has been 3000-5000 sq foot homes priced from $600,000 and up. If a developer has to chose between building the 2000 sq ft home to be sold below $225,000 and building the 4000 sq ft to sell for $700,000 ---- well they make more on the $700,000.

This reminds me of the one episode of The Apprentice I happened to watch - and maybe a clue to Donald Trump's economics. The competing teams were taken to one of his glitzy casinos that had just opened in Atlantic City and told to come up with a plan to make the most money from the hordes of visitors who had created a bottleneck. One team offered a way for the miniscule number of high rollers to avoid the crowd and linger longer at the gambling tables, while the other came up with a practical way to move the crowds into and through the machines they favored. The first solved a non-existent problem, the latter a huge logistical one, for which they were fired. Trump delivered a lecture in business that you make money off people with money, lots of it, not by meeting needs of people without it. (Procter and Gamble would no doubt beg to differ.) By the way, the casino and Atlantic City are basically shuttered today.

In our area (school district in particular) the inventory is low. We are listing next week so this should be good for us since there is not much to choose from and the school district is a big draw. It took us a year to find a house that was in our price range that did not need tons of work.

ANd here a neighbor who is a relator keeps asking if we want to sell......he has a lot of buyers for under $250k (looking for summer home or maybe part-time retirement home). We only bought it in Oct 2012 and have thrown gallons of Old Village paint at it, miles of moulding and trim and acres of slate and limestone tile and custom ceramic tile (but it didn't take much money to do) ........ he keeps saying 'but but but ....I can sell it for minimum 2 1/2 times what you paid" (True statement) and I keep saying and "I move to where????!!! There is nothing out there!"

DD just bought a house in a Ft Worth suburb. Houses were selling before they were even listed for others to know about; in fact some sold before being listed and before DD could even get to their pre-listing private showing. So they entered the fray and vigorously bid on a nice house as soon as they saw it.

Yes! We're looking in the beautiful and growing north Charlotte area. We've been looking for 2 1/2 years. We're older couple looking for a smaller one level home under $225,000 that doesn't need a ton of work or a 3/4 acre + lot around $30,000 to build. We lost out on one perfect home and two lots, all were under contract within 24 hours of listing. Our buyer's agent says the market is "incredible" -- yeah, for realtors and sellers - buyers not so much. Some listings get 5 or 6 visits a day for the first few days and there's a bidding war. There's not much on the market. We're worried we're getting priced out of the area. It is really tough for "middle class" buyers.

Abby, that is the area I work... North Charlotte and Lake Norman. Single level homes are few to be found, especially when you add in the .75 acre plus criteria. Your best bet is to make sure that you are the winners of the next bidding war. 99% of the time you do not have to go that much over asking price to win a bidding war. Good luck.