On a call to discuss sales of existing single-family houses, condos and co-ops, the chief economist for the National Association of Realtors was blunt: “We want more supply, more supply, more supply.”

The remarks a few weeks ago by Lawrence Yun about the market for those residential properties come after months of chronic low inventory that has weighed on an already sluggish industry.

But on that call, Yun shared that his organization's latest data showed that in April, the supply of existing homes grew to its highest point since 2021 — and Realtors want more to increase sales.

As the housing market has attempted to regain its bearings from a pandemic recovery, low inventory has sent home prices soaring to record highs. Together, the lack of supply and high prices are combining with elevated mortgage rates and continued buyer demand to disrupt home buying. Some prospective buyers have been pushed from the market completely, instead opting to rent single-family properties or apartments in multifamily developments.

Now, inventory growth is showing up across the industry, an early sign that a market healing could be underway, at least in some parts of the country. That could bring down prices as long as demand keeps up, industry professionals say.

A report on June 3 from mortgage data provider Intercontinental Exchange, for example, showed that nearly 90% of U.S. metropolitan areas had more homes for sale in April than at the same time in 2023. The report also found that in 14 of the top 100 markets, inventory of homes for sale had grown to pre-pandemic levels as overall inventory had “hit its highest seasonally adjusted level since mid-2020.”

Part of the rebound can be attributed to a historically low starting point. The supply situation was so dire last year that recent growth could be, in some cases, indicative of more of a catch-up game than out-of-the-ordinary increases.

“It's just a testament to how tight the market was the last year,” Yun said in May.

To be clear, there are limits to that inventory growth. Some sections of the country, from New England to the Plains, are still stagnant as lower construction and higher costs contribute to keeping buyers locked in place.

Even so, some trends in the data indicate that the growth involved several influences at play, according to analysts.

Inventory growth hasn’t been evenly distributed: While markets in states such as Florida, Texas and Arizona have experienced rapid growth, and in some areas have achieved pre-pandemic inventory levels, other regions are still stuck. The Northeast and Midwest, for example, remain severely constrained in terms of inventory, according to the findings by the Intercontinental Exchange and data from the Federal Reserve of St. Louis.

Part of the increases in inventory in those markets can be attributed to the rapid building of new single-family housing, creating a “higher starting point from a supply standpoint,” Rick Palacios Jr., director of research at John Burns Research and Consulting, told CoStar News in an interview. In 2023, eight of the top 10 newly built master-planned communities based on sales were in Florida and Texas, according to the U.S. housing industry consulting firm.

Demand for construction in Florida and Texas, where 13 of the 14 markets with inventory back to pre-pandemic levels are located, hasn't just been driven by supply needs. There are also perennial factors that have bolstered building. Some homebuyers have migrated to markets in Texas and Florida for warmer weather, proximity to water, lower taxes and even to be near family members. That's also driven buyers to states such as Arizona and Colorado, two other states seeing rapid expansion.

The inventory growth isn't a promise that buyers will come, though. While there is high demand for houses and higher inventory can drag on prices, buyers are still being put off by other disruptions driving up the costs of purchasing and owning a home.

Analysts also pointed to rising insurance costs as pushing homeowners to list their properties, increasing supply for prospective homebuyers.

“Not only the cost of hazard insurance and all forms of that, but just the ability to insure,” Palacios said. “That has gotten to be exponentially more difficult and also just insanely more expensive.”

In Florida, for example, the average cost of an annual home insurance premium is more than $3,000 greater than the national average, according to analysis from personal finance website Bankrate. In Texas, that difference stands at nearly $1,500.

The added costs of insurance can also force investors out of some markets, economists say.

Shifting demographics could be causing a re-adjustment in inventory, too, Palacios said.

“The boom times for people flowing into Texas, flowing into parts of Florida and even the Southwest, I think that those have normalized, if not … over-corrected below what we saw even pre-COVID,” he said. “You’ve just got fewer households forming and coming into these places.”

Overall, there is still a serious undersupply of homes in the United States.

Nationally, active listings are still about 36% below pre-pandemic levels, according to the Intercontinental Exchange report. Satisfying existing demand would require at least 1.5 million more vacant for-sale and for-rent units, according to a May 16 report from mortgage giant Freddie Mac.

Northeast and Midwest markets are especially constrained, the report found. Palacios said that trend can also be at least partially attributed to building. As new home construction has boomed in some parts of the country, it’s a “180 conversation” in other regions.

“Your starting point, from a supply standpoint, is just significantly lower,” according to Palacios.

Mortgage rates are also keeping homeowners in place, limiting supply. Some homeowners locked in low mortgage rates during the pandemic. Now that rates are hovering around 7%, those owners aren’t willing to give up their existing mortgage. Compared to states including Florida and Texas, regions such as the West, Northeast and Midwest, have a higher concentration of those locked-in rates, Palacios said.

“There's just a structural disincentive, because, hey, I've got this low rate, and rates really have to move for me to really do something here,” he said.