Nationally, there were just 1.93 million homes on the market in March, down 16.8 percent from the prior year, according to the National Association of Realtors. In a healthy market, there's roughly a six month supply. This March, that number had fallen to 4.7 months — a situation stacked against buyers.
As more would-be buyers bid on fewer properties, prices are being forced up at a rate that might be overstating the market's health. Prices in the top 20 cities have risen 9.3 percent in the past year, according to the S&P/Case-Shiller home price index. That's the fastest year-over-year increase since May 2006.
Homes now sit on the market for just 62 days, down from a median of 91 days last year. Would-be buyers who like a home are being urged to act fast.
The tight supply is a key reason that Susan Wachter, a real estate and finance professor at the University of Pennsylvania's Wharton School, estimates a full recovery is still three to five years away. Even so, Wachter calls this "a breakout spring." The public now recognizes, she says, that the housing recovery will last.
The Bells have already lost out on one house they liked.
"We wanted a day to think about it," says Beth Heinen Bell, 32, a communications coordinator for a writing festival. "We left the house, and our agent got a call that there was an offer in."
Diane Griffin, CEO of Griffin Properties, which has been helping the Bells search for a home, says a major problem is that many potential sellers aren't being realistic about price. She often has to explain that their property isn't worth what it was during the boom.
"This is the most difficult conversation I have with people," she says. "I have it multiple times a day."
Prices here bottomed in October 2011, after falling 24.5 percent during the prior 5½ years. They have since risen 7.6 percent, to a median of $114,400, giving many buyers enough confidence to come into the market. Yet even so, home values remain 17.2 percent below the peak, according to Zillow. If prices continue to rise, they will eventually help more sellers come off the sidelines.
Maureen and Bruce Hart are one of those couples who aren't ready to sell.
They've been in their house in East Grand Rapids since July 1990. Their two grown kids have moved out. Moving into a smaller home — with a smaller mortgage — makes sense. Yet the couple just spent more than $100,000 on renovations. There's a new kitchen, new roof, new bathroom, new windows and the addition of a porch.
"We really thought we were going to stay," says Maureen Hart. Then a house down the road sold for nearly half a million dollars. "That was a real eye-opener."
A real estate agent suggested listing the home, in a suburban neighborhood with packs of after-work joggers and cyclists, for $393,000. The Harts feel it's a good price. Still, they hesitate because they wouldn't recoup the money they spent on renovations.
Their other hesitation, Maureen Hart says, is that "we haven't really found anything we would be comfortable moving into."
In many ways, the Harts need more homeowners like themselves to offer their properties for sale.
Some relief will also eventually come from faster construction. Builders broke ground on homes in March at the highest annual rate since June 2008. But construction firms aren't yet ready to return to the even greater levels of building needed to fill the housing shortage. They're worried about rising costs for materials and labor. And many have had trouble finding skilled workers.
The overall pace of homes under construction rose to a seasonally adjusted annual rate of 1.04 million in March, the Commerce Department reported. March's pace was nearly 46 percent higher than in the same month in 2012.
Analysts say prices and sales still need to climb further before builders ramp up construction. The prices that new homes are selling for still don't match the cost of construction.
For now, that leaves would-be buyers with few options. Agents urge their clients to act fast, knowing how fierce the competition is. But often, it's not quick enough.
Grand Rapids real estate agent Michelle Gordon says that on Monday mornings, she typically gets a list from her clients of six or seven homes they want to tour that Saturday.
By the time the weekend comes around, Gordon says, "I'm lucky if I have two to show."
Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.