Housing inventory fallen dramatically in the last year, but has it fallen enough to create a seller’s market?

There was much to like in last week’s existing-home sales report from the National Association of Realtors. Existing-home sales were up 9.1 percent from last year, median existing-home price was up 12.3 percent yearly, and most encouraging of all, distressed property sales made up just 23 percent of all sales, down by more than a third from January 2012.

Yet, despite all this good news, nothing could obscure the fact that housing inventory declined yet again, falling for the eighth straight month and to its lowest level since 1999. Lawrence Yun, in comments accompanying NAR’s report, said that with housing inventory so low, a seller’s market is brewing.

“Buyer traffic is continuing to pick up, while seller traffic is holding steady,” Yun said. “In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”

But how far as housing inventory truly fallen in the last year? Well, take a look at our infographic below for some perspective:

Are we really entering a seller’s market, though? Stuart Hoffman, PNC Financial Services Group’s chief economist, told Forbes that may not be the case.

“I don’t think it is a seller’s market yet, but I do think we are getting back to a more balanced market where it’s no longer simply a buyer’s market,” Hoffman said, adding that as price increases continue, more sellers will list their properties and alleviate housing inventory shortages.

And as Forbes noted, Zillow recently calculated that nearly two million homeowners emerged from negative equity in 2012, so we could indeed see more homes hit the market this year.