MELISSA BLOCK, HOST:
Spring has arrived and with it, the usual pick-up in the pace of the housing market, but good luck finding a home to buy. Housing inventory, the number of houses actually for sale, is low in many parts of the country and very low in the West. Generally speaking, that's good news for the economy because it's pushing prices up. Here's NPR's Yuki Noguchi.
YUKI NOGUCHI, BYLINE: Errol Samuelson spends a lot of time staring at housing numbers.
ERROL SAMUELSON: So it's really interesting. Some of these markets which were so hard hit, when the bubble burst, are now just roaring back.
NOGUCHI: Samuelson is president of Realtor.com. He says nationally, inventory is 16 percent below where it was last year. But that's an average. There are some markets, especially in California, where it's not uncommon for supply to be down 60 percent. And, he says, there are both good and bad reasons for the lack of homes on the market.
On the positive side...
SAMUELSON: That distressed inventory is now gone.
NOGUCHI: A less promising reason is that about a fifth of all homeowners still owe more than their home is worth. Another is that many builders aren't building or can't build. This week, the National Association of Homebuilders said builder confidence is slipping as the cost of building materials increases and there's little developed land to build on.
Samuelson says that means there's not as many new homes coming to market.
SAMUELSON: Every step of the chain downsized in the last six years and I think this recovery has happened so much more quickly than people expected that everyone's sort of been caught, you know, when the light's turned on.
NOGUCHI: New data out today from the National Association of Realtors underscores how few homes are for sale. It's the primary reason home prices are increasing rapidly in many markets. Lawrence Yun is chief economist for the Association. He says last year, investors, including private equity groups, snapped up many distressed properties.
This year, with improvements in both the job and stock markets, regular buyers are also coming back in large numbers.
LAWRENCE YUN: And that will provide a significant boost in consumer spending.
NOGUCHI: Specifically, he expects a wealth effect from all the extra spending on furniture, moving services and other housing-related expenditures will reach $100 billion this year, enough to offset the federal spending cuts from the sequester. But Yun says, not all parts of the housing economy are moving in tandem, namely new supply is not coming on fast enough.
YUN: Naturally, a very low inventory, you want to produce more, restock that inventory. The builders, small-time builders are not doing that.
NOGUCHI: He says the increase in new housing construction is happening almost exclusively among the biggest builders, companies that have access to capital from the public markets. Small builders, which rely more heavily on local community banks, are still having trouble getting construction loans. Ed Harrison is president of a small builder in Ovilla, Texas.
ED HARRISON: It would be almost impossible for a new builder to come out and get a loan.
NOGUCHI: Harrison says after the housing bust, Harrison Homes changed its business model to build fewer, more expensive homes and not to rely on bank loans.
HARRISON: Since '08 we have almost stopped doing any speculative housing with any type of loans. We do it out of our pocket. When we do it, we just bankroll it ourselves.
NOGUCHI: With the new Dodd-Frank banking regulations and increased costs to small businesses, Harrison says, it just makes sense to stay small.
Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
