by Calculated Risk on 3/27/2013 05:07:00 PM

I've been watching inventory closely, and in February I wrote: "if inventory keeps falling sharply, we might see stronger house price gains in 2013 than originally expected ...". Since then I've pointed out several analysts who have increased their house price forecasts for 2013.

Nick Timiraos at the WSJ lists more analysts today: Home Prices Seen Making Stronger Gains in 2013

Ivy Zelman, chief executive of research firm Zelman & Associates, said Wednesday she was now expecting prices to rise by 7% this year, up from earlier estimates of 6%, 5%, and 3%. ... She’s also calling for a 5% gain next year because she says the supply shortages and growing demand that fueled last year’s turnaround show no signs of easing.

John Burns, who runs a real-estate consulting firm in Irvine, Calif., is calling for a 9% gain in home prices this year, up from a 5% forecast late last year.

Among those who have revised up their forecasts in the last month are analysts at Morgan Stanley, Bank of America, Capital Economics and J.P. Morgan, which have taken their forecasts to 6-8%, from earlier predictions of 3-6%.

The key is inventory. In recent weeks, we've seen some increase in inventory (more than the usual seasonal increase), but inventory levels are still very low. Right now, unless inventory increases significantly over the next few months, it looks like prices will increase at about the same rate as in 2012.

Although there are reasons for the low inventory - homeowners with negative equity can't sell, strong investor buying at the low end, homeowners not wanting to "sell at the bottom" to list a few - eventually higher prices will lead to more inventory coming on the market and smaller price increases.