So the increase in supply is welcomed news, as the severe lack of homes for sale has been pushing home prices higher faster than anyone expected. That swift jump in prices, along with low supply, have been hampering sales, which were up just 0.8 percent month-to-month in February, missing analysts' expectations. Single-family home sales were actually weaker, while condo sales jumped nearly 9 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."
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 percent of home buyers in February, according to the NAR, up from 19 percent in January. All-cash sales hit 32 percent, up from 28 percent, and distressed home sales also increased to 25 percent of all sales, from 23 percent.
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."