The National Association of Realtors (NAR) reports December existing home sales Tuesday morning and the consensus estimate calls for a seasonally adjusted annual rate of 5.538 million, with sales up 0.7% month over month and 15.4% year over year. The big problem facing home buyers and real estate agents is inventory.

According to the NAR, housing inventory decreased by 8% in November to 1.85 million homes, equal to a supply of just four months. Inventory has declined year over year for 18 consecutive months and is currently down 9.3% year over year from 2.04 million in November 2015. One housing economist expects December inventory levels to tumble 13% to 1.61 million.

As existing home inventory shrinks, prices rise as competition for the available homes increases and that shuts out many first-time home buyers. Jonathan Smoke, chief economist for Realtor.com, notes:

More than two-thirds of the markets are seeing less inventory now compared to a year ago. Tight credit and limited new construction are clearly at play.

Realtor.com analyzed the housing market in 150 of the country’s largest cities and reported how much of the available housing stock in that market was available for sale and the percentage decrease in homes available for sale compared with 2015.

Here are the 10 tightest housing markets in the country:

1. Seattle, Washington: available for sale, 0.4%; year-over-year decline, 13.4%
2. Eugene, Oregon: available, 0.6%; decline, 27.3%
3. Grand Rapids, Michigan: available, 0.6%; decline, 24.7%
4. Buffalo, New York: available, 0.6%; decline, 15.9%
5. Fort Wayne, Indiana: available, 0.8%; decline, 24.9%
6. Sacramento, California: available, 0.6%; decline, 5.5%
7. Detroit, Michigan: available, 1%; decline, 25.7%
8. Portland, Oregon: available, 0.6%; decline, 14.2%
9. Santa Rosa, California: available, 0.4%; decline, 1.8%
10. Omaha, Nebraska: available, 0.8%; decline, 15%

Where are cities like San Francisco, famous (notorious?) for their limited supply and high prices? High prices tend to encourage more sellers into the market, easing the shortage of inventory. Prices will remain high, but with more homes on the market, price increases may also moderate. In San Francisco, housing availability is up 4% compared with the end of 2015, well out of the running for the cities where the housing shortages are biggest.

See Realtor.com for more details and commentary.

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