The number of homes listed for sale nationally is near a 20-year low, according to industry data, and analysts say the low inventory means home sales will likely slow this spring.
Listings in Seattle are down 66 percent since 2012 and are down 61 percent over the same period in Denver, according to real estate data provided by Trulia, the online residential real estate site.
Trulia's data also showed a drop in home listings in the Little Rock metro area. Trulia supplied housing data to The Associated Press for the largest 100 metropolitan areas in the United States. The Little Rock metro area, Pulaski, Faulkner, Grant, Lonoke, Perry, and Saline counties, is the only metro area in Arkansas on the list.
There were 3,685 homes for sale in the Little Rock area in February 2012 and 3,364 homes for sale in February this year, a drop of 8.7 percent.
Trulia's February count corresponds to about four months of inventory for the Little Rock metro area, where an average of about 860 homes sold each month last year, according to the Arkansas Realtors Association.
A housing market is considered healthy if it has about a six-month inventory of homes for sale, said Scott McElmurry, chief executive officer of Bank of Little Rock Mortgage.
In 2008 to 2009, in the middle of the recession, a glut of foreclosures pushed the housing inventory up to as high as 12 or 13 months, McElmurry said.
"[Homeowners] could [hardly] sell their houses, and to sell them, they had to drop their prices," McElmurry said. "So you had a buyer's market. People could pick and choose and give low-ball offers to get properties."
If the market goes in the opposite direction, where there is a low inventory of homes for sale, it becomes a seller's market, McElmurry said.
That is the situation in some markets nationally.
"Sellers will have the edge again this year," Ralph McLaughlin, chief economist for Trulia, told the AP. "Homebuyers are really going to be scraping the bottom of the barrel as far as housing choice is concerned."
The intensity of the competition this spring has surprised sellers such as Kathleen Mulcahy, a 37-year-old product manager in Seattle, the AP reported.
Within a week of listing her one-bedroom, one-bath condo, Mulcahy received 21 offers -- all above her asking price of $398,000. Most of the offers came with built-in triggers to automatically rise in case a rival bidder sweetened a bid. In the end, she accepted an offer of $500,000 -- all cash.
"A lot more than I expected," Mulcahy told the AP.
Such a market is scary, because it could lend itself to a housing bubble, Bank of Little Rock Mortgage's McElmurry said.
"You could get back into a similar situation like 2008, which was caused for different reasons," McElmurry said.
That housing bubble was created by an abundance of exotic lending products, which increased the supply of buyers and raised housing prices in the huge California and Florida markets, McElmurry said.
"If you have too many buyers, it will drive prices up," McElmurry said. "If you have too many sellers, it will drive prices down. Either way, it's troublesome."
But the Little Rock market seems to be in a good spot, McElmurry said.
"It's purely anecdotal, but we don't consistently hear stories about multiple bids on a house," McElmurry said. "That's more of a demand for that particular house. You didn't hear those things two years ago. Now we are, but it's not across the board. And we don't have customers that we've prequalified telling us they've [been outbid] for three or four houses."
Even though Trulia didn't supply information on the Northwest Arkansas housing market, data is available through the Skyline Report, a biannual analysis conducted by the Center for Business and Economic Research at the University of Arkansas, Fayetteville.
Housing inventories in Benton and Washington counties have dropped 29 percent from 2012 to 2016, said Mervin Jebaraj, interim director of the Center for Business and Economic Research. There were 3,035 homes listed for sale in 2012 and 2,147 in 2016, Jebaraj said. That's about a 2½ month inventory for the two counties.
"Prices are picking up, but it's not entirely clear that there is a complete shortage [of homes for sale]," Jebaraj said. "We are seeing an increase in the number of people renting."
But when new houses come on the market, they are sold almost immediately, Jebaraj said.
The counties in the Northwest Arkansas metro area don't have enough inventory to meet demand, said Pat Harris, co-chief executive officer of Coldwell Banker Harris McHaney & Faucette.
If a house in the $100,000 to $200,000 range comes on the market, it will have at least two offers within two days, Harris said. That's because there are more buyers than listings, Harris said.
An average of 31 people a day are moving into the two counties, Harris said.
"The average sales price in the first quarter was $214,000," Harris said. "Stuff below that is [selling] like crazy."
A solution for both central Arkansas and Northwest Arkansas is a hefty increase in new construction.
But for various reasons, it isn't that simple.
In Pulaski County, most of the new construction has been in multifamily housing, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
And in Pulaski County, there aren't enough lots on which to build new homes, said Brenda Hartness, president of Billy Hartness Construction.
"There is more of a lot shortage [in Little Rock] than anything," she said. "The builders are prepared to build and do," she said. "But our problem is a lack of buildable lots. That has been our problem in Little Rock for the last two or three years."
Billy Hartness Construction builds about 10 to 15 homes a year in the $250,000 to $650,000 price range, Hartness said.
Building on the western end of Little Rock is hampered by the Lake Maumelle watershed and by terrain issues, McElmurry said. Development to the north stops at the Arkansas River. North Little Rock and Sherwood have no major ability to develop, McElmurry said.
"The only places you can see as far as just vacant land are towards Cabot or between Benton and Hot Springs," McElmurry said.
There has been some development in east Little Rock, but that isn't the most desirable area for homebuyers, McElmurry said.
"Little Rock is somewhat landlocked for new development," McElmurry said.
In Benton and Washington counties, there is significant demand for $100,000 to $200,000 homes, but builders typically want to build homes larger than that, Harris said.
For the past three years, the housing market in much of Arkansas has shown strong growth, Pakko said.
"We continue to see home sales pick up, but there is not a lot of construction activity yet," Pakko said. "So the outcome of that is a reduction in inventory. I guess I would see this as the normal life cycle of expansion and demand for housing."
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