Sonoma County home sales slowed in January as the number of available short-sale and foreclosure properties sharply declined.
Buyers purchased 280 single-family homes last month, down 16.7 percent from a year earlier, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws.
Real estate agents insisted that demand remains strong, but purchases are constrained by a shortage of inventory, which has dropped to its lowest level in eight years.
"Right now, we have a plethora of buyers and not enough to sell them," said Stephen Liebling, manager of Coldwell Banker in Sebastopol.
Even though more homes are being listed by sellers with equity, there has been a drop in the number of new distressed properties coming to market.
In the past six months, a total of 1,617 homes with equity were counted as new listings, an increase of 11.4 percent over the same period a year earlier. But in that time new listings for distressed homes declined 47 percent to 725.
The market this year likely will continue to have more equity sales and fewer transactions involving distressed properties, Laws said. But he maintained it was too early to determine whether overall sales will decline in 2013.
"I don't know who's going to come to the party yet," he said. He predicted listings will pick up "as soon as the mustard blooms," with spring and early summer traditionally constituting the peak homebuying season.
January ended with a median sales price of $365,000. The median declined 6.4 percent from December but remained 12.9 percent above January 2012.
The housing market typically slows in winter, but January's sales were marked by a divergence between the equity and distressed segments. Equity sales actually increased from January 2012. But the number of distressed sales was cut nearly in half.
As a result, the overall sales mix changed. A year earlier, half of the houses sold involved a foreclosure or a short sale -- a property that was sold for less than the amount of the mortgage.
By last month the portion of distressed properties had declined to one in three.
Distressed sales surged as the housing boom went bust, with the annual median price plunging from $595,000 in 2005 to $325,000 in 2011.
In the turbulent days of early 2009, three in every four sales involved distressed properties, mostly foreclosures.
January ended with 586 homes available for sale, the lowest level since January 2005. The inventory represented roughly a two-month supply at the current pace of sales, considerably lower than the six-month supply that experts say exists in a normal housing market.
The lack of listings was a concern at last month's California Association of Realtors meeting in Monterey.
"Throughout the state, north and south, we heard the same thing: There is no inventory," said Sally Crain, a broker associate with Century 21 Alliance in Santa Rosa.
The state may continue to see low numbers of foreclosure properties coming to market this spring.
ForeclosureRadar, a Truckee company that tracks foreclosure data, reports that default notices -- the first step in the foreclosure process -- dropped 77.7 percent in January from a year earlier to 4,500 statewide. It was the lowest amount in company records going back more than six years.