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The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in February rose 0.8% to 4.98 million from an upwardly revised total of 4.94 million in January. Sales are up 10.2% year-over-year for the month of February. Last month’s sales are the highest since the tax credit period of November 2009.

Housing inventory reversed its January decline, increasing by 9.6%, a supply of 4.7 months compared with January’s 4.3 month supply. Listed inventory is down 19.2% year-over-year, when there was a 6.4 month supply available.

NAR’s chief economist said:

Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise. Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable,” he said. “The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive.

According to the NAR, the national median existing home price in February was $173,600, up 11.6% compared with February 2012 and the twelfth consecutive month to see a price gain.

Foreclosed and short sales accounted for 25% of February sales, up from 23% in January and below the 34% share in February 2012. Foreclosures sold at an average 18% discount to the February median price, while short sales sold at a discount of 15%.

The low inventory offers more hope for home builders like Lennar Corp. (NYSE: LEN) and KB Home (NYSE: KBH), both of which reported stronger earnings in the last quarter and strong order backlogs going forward. One cautionary note comes from the National Association of Home Builders (NAHB), which has noted that supply chain problems in the housing industry have not recovered fully from the collapse.