Existing home sales rose steadily in January in most of the country and left the supply of homes at a 13-year low, signaling the housing market is recovering.

The 0.4 percent increase from December took the seasonally adjusted annual rate to 4.92 million, the National Association of Realtors reported Thursday. It’s a marked 9.1 percent higher than a year ago.

“It’s not on fire, it’s not a barn-burner, but we’re having a moderate, measured recovery,” said Jed Smith, director of quantitative research at the National Association of Realtors.

The market has been supported by historically low mortgage rates, and the tightening supply of available homes is expected to play a major role in the coming months.

The inventory of single-family homes, townhouses and condos in January fell 4.9 percent from December to the lowest point since December 1999. With 1.74 million existing homes available, the supply would be exhausted in a little over four months.

Inventory is down as distressed homes sales – short sales and sales of foreclosed homes – fell to 23 percent in January from 35 percent a year ago.  In states like California and Nevada, new legislation has made it harder for banks to foreclose on delinquent mortgages.

The West, which depended heavily on distressed home sales, was especially affected by low inventory. It was the only region in which home sales were down, falling 5.7 percent. Because of low supply, the median home price in the region jumped 26.6 percent above a year ago.

“There is a lot of demand. If we could just figure out how to get our supply sausage fixed,” said Amy Shocket, a realtor at Dickson Realty in Reno-Sparks, Nevada.

National median home prices rose 12.3 percent from a year ago to a median price of $173,600. As a result, buyers who’ve been waiting to purchase homes at the lowest price possible have finally been coming into the market, scooping up available inventory.

Inventory is also low because sellers have been reluctant to put their homes for sale, as many of them owe more on their mortgages than their houses are worth.

Though seasonal inventory may pick up in the spring, it may not be enough to offset multiple bidding on homes and rapid price increases, which can affect affordability.

As a result, the drop in supply is expected to spur new home construction to bring more homes to the market.

In January, housing starts for single-family homes were up 0.8 percent to an annual rate of 613,000 new homes, according to the U.S. Department of Commerce.

“It’s good news for a lot of industries,” said Mark Vitner, a senior economist at Wells Fargo Securities. “It does provide a huge boost for the overall economy.”

As more existing homes are being sold, industries that produce durable goods will benefit as people make long-term purchases on items like furniture and refrigerators.

With retail sales remaining anemic and gas prices continuing to rise, housing is expected to play a major role in the nation’s recovery in 2013.

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