Act now! 10 major housing markets with the shortest supply of homes

Denver

Decline in inventory: 42%

This mountain-high city never experienced the highs and lows in home values that its coastal counterparts did. And now, with rents rising and vacancy of just 2%, more apartment-dwellers are taking the plunge into homeownership, local broker Gary Bauer says.

This city's inventory in February was down 42% from the same period a year earlier, at just 10,086 units. The number of homes going under contract spiked 19% between January and February of this year as buyers raced to take advantage of low interest rates and relatively low prices.

"I'm not sure what magic thing happened in January, but buyers really came out," Bauer says.

Prices aren't falling as they are in many other markets, according to Metrolist. The average home price of $270,821 was up 2% from February 2011. Bauer says March looks to be another record month.

Find homes for sale in Denver on Realtor.com

• On our blog, 'Listed': Is the home-sales glass half full or half empty?

• Video: Fabulous homes under $300,000

• Bing Cube: Check out photos of Denver

Portland, Ore.-Vancouver, Wash.

Decline in inventory: 38%

The number of available homes in these beautiful Northwest markets slid 38% in the last year to 7,113, as buyers scrambled to pick up a bargain. Downtown condos are becoming scarce, as are homes in coveted Portland neighborhoods such as Irvington and Alameda.

"People are snapping up everything there as quickly as possible," says Niels Brownlow, a broker with Coldwell Banker Barbara Sue Seal in Portland.

A year ago, buyers could wait three months and still find the same home sitting on the market, but that's no longer the case with decent listings. "If (buyers) are not there the first day it comes on the market, it's gone," he says. Prices aren't shooting up, but many properties are selling at list price or above.

Realtor.com: Find homes for sale in the Portland area

• Video: Wacky home-seller tactics

• On our blog, 'Listed': Home sales have best February in 5 years

• MSN Money: Is affordable housing a myth?

Seattle-Bellevue-Everett, Wash.

Decline in inventory: 36%

Seattle came late to the housing bust, and it might just leave early.

The number of homes listed for sale dropped 36% since February of last year to 7,042, as buyers have returned to the market to scoop up lower-priced homes. Some desirable inner-fringe neighborhoods were even tighter.

Jed Kliman, managing broker at Windermere Realty in Seattle, says there's a "frenzy" to get in at what most people think is the bottom. Just how long this frenzy will last is anyone's guess, Kliman says, but the competition has already started to nudge up prices.

Find homes for sale in the Seattle area on Realtor.com

• Video: How to pick the perfect house

• MSN Money: 5 mistakes home sellers make

• What are homes worth near you?

San Jose, Calif.

Decline in inventory: 34%

High-tech job growth and rising rents have fueled an increase in buyer demand in the Silicon Valley.

In February, 3,957 homes were for sale in San Jose, a 34% drop from February 2011. That's because it has now become cheaper to buy an entry-level home than to rent in this pricey area, says Rick Turley, president of Coldwell Banker Residential Brokerage San Francisco Bay Area.

It's unclear how long this trend will last. Prices for modest homes are on the upswing, especially in coveted areas of Palo Alto and Mountain View.

Realtor.com: Find homes for sale in the San Jose area

Read:  Strong demand has melted away inventory in some housing markets

• Video: Dumb things homebuyers do

• On our blog, 'Listed': Is housing near that elusive bottom?

Salt Lake City-Ogden, Utah

Decline in inventory: 31%

The recovery is officially beginning in this mountain market. Low- to middle-priced buyers are out in force, trying to take advantage of low interest rates and affordable prices, says Dave Winters of Re/Max Associates in Salt Lake City.

"They know we've hit bottom and are moving up again," Winters says. "There's no longer a complacency among buyers."

Salt Lake City and Ogden had 6,743 homes available for sale in February, a 31% drop from February 2011. The scarcity of homes at the lower price points has prompted multiple offers and sales over list prices. Higher-end homes are the ones lingering.

The strong demand is even prompting some owners with equity to list their homes, knowing that they can get a lower price on a move-up home and that they won't have to wait long for their property to sell.

Check out what's for sale in Salt Lake City on Realtor.com

• On our blog, 'Listed': Is the home-sales glass half full or half empty?

• Video: Fabulous homes under $300,000

Sacramento, Calif.

Decline in inventory: 30%

California's capital city is once again bouncing back, after taking a starring role in the foreclosure crisis several years ago. The number of listings here dropped 30% between February 2011 and February 2012, to 8,433.

Even higher-end homes are moving again, says Laurel Davies, an agent with Century 21 M&M Associates. A $700,000 golf-course home she sold recently received six offers in its first few days on the market. "(People) are speculating that interest rates may rise after the election," she says, "They are trying to buy an upscale home while they still can."

Entry-level homes are selling briskly too, as more workers can now afford them. Even short sales, which many buyers used to avoid, are now receiving multiple offers, Davies adds, which is nudging prices up a bit in many neighborhoods.

Realtor.com: Find homes for sale in Sacramento

• Video: Wacky home-seller tactics

• On our blog, 'Listed': Home sales have best February in 5 years

• MSN Money: Is affordable housing a myth?

San Francisco

Decline in inventory: 29%

As of February, 3,533 homes were for sale in San Francisco, a 29% drop from the same time a year ago.

The recovery here started at least a year ago, as job growth and demand swelled. But because the flow of distressed properties from the banks has slowed to a trickle, not much is available to buy. And few traditional sellers are listing their home, because they don't think they'll be able to turn a profit.

Still those attractive homes that do hit the market sell quickly, typically with three to five offers, Turley says.

Check out San Francisco homes for sale on Realtor.com

• Video: How to pick the perfect house

• MSN Money: 5 mistakes home sellers make

• What are homes worth near you?

Birmingham, Ala.

Decline in inventory: 29%

Homes in this Southern city are moving briskly, with more higher-priced homes and new construction starting to sell. Inventory here dropped 29% in February from the same time a year earlier, to 7,191 homes.

Homes aren't disappearing from the multiple-listing service, as they are in some other cities, but the number of days a home spends on the market has declined as prices have stabilized and buyers feel more confident about the market.

Realtor.com: Homes for sale in Birmingham

Read:  Strong demand has melted away inventory in some housing markets

• Video: Dumb things homebuyers do

• On our blog, 'Listed': Is housing near that elusive bottom?

Memphis, Tenn.

Decline in inventory: 29%

Who knew Memphis was so hot? Low prices in this river city are bringing out a new crop of first-time homebuyers, as well as foreign investors looking for rental property, agent Rita Driver says.

"I'm winding up with more multiple offers now than I have had in the last five years," Driver says. And, unlike in years past, more of these buyers are armed with big down payments.

In February, 4,916 homes were for sale in Memphis, a 29% drop from the same period a year earlier. It's not just first-time homebuyers looking for a bargain, Driver says; even higher-priced homes are moving again. "Our market has pretty much returned back to normal" in terms of sales, Driver says. Prices? Well, that's going to take some time.

"We are starting to see a leveling off overall," Driver says, with a modest uptick of 2% in the most desirable neighborhoods.

Find Memphis homes for sale on Realtor.com

• On our blog, 'Listed': Is the home-sales glass half full or half empty?

• Video: Fabulous homes under $300,000

• Bing Cube: Check out photos of Memphis

Richmond-Petersburg, Va.

Decline in inventory: 29%

Buyers are out in force in the Richmond market. Unfortunately, there's not a lot to choose from. In February, a total of 5,530 homes were listed in Richmond and Petersburg, a 29% drop from February 2011.

The area, which has an unemployment rate lower than the national average, has posted month-over-month sales increases since last July. "We are definitely headed in the right direction," says Laura Lafayette, CEO of the Richmond Association of Realtors.

Prices are still low, and homes in every price range — even million-dollar homes — are moving. But it's the bargain entry-level homes that are getting multiple offers, Lafayette says.

Realtor.com: Richmond homes for sale

• Video: Wacky home-seller tactics

• On our blog, 'Listed': Home sales have best February in 5 years

• MSN Money: Is affordable housing a myth?