Month-to-month inventories have now fallen for 27 consecutive months, according to the monthly RE/MAX National Housing Report. Inventory was 29.1 percent below September 2011 and may have contributed to the drop in sales from August.

The inventory of homes-for-sale in September fell 5.3 percent from August and 29.1 percdent from inventory levels seen in September 2011. Month-to-month inventories have now fallen for 27 consecutive months. While a shrinking inventory is certainly causing home prices to rise, there’s also a concern that it may also be limiting sales. Given the rate of sales in September, the average Months Supply was 5.5, about two months lower than the 7.7 average seen in September 2011. Very low Months Supply continues to be seen in San Francisco, CA 1.3, Los Angeles, CA 1.7, Orlando, FL 2.6, Denver, CO 2.6, Washington, DC 2.8, Detroit, MI 3.0, San Diego, CA 3.2, Seattle, WA 3.2 and Miami, FL 3.3.

In September, the average Days on Market for sold homes was 81. This is unchanged from August, but represents a drop of 13 days from the 94 day average in September 2011. September represents the fourth month in the last 12 months with a Days on Market average below 90, and the lowest average since June 2010. The Days on Market average continues to fall in many markets due to very low inventory. Days on Market is the number of days between first being listed in an MLS and when a sales contract is signed.

While shrinking inventories are is certainly causing home prices to rise, there’s also a concern that it may also be limiting sales and creating bidding wars in some markets, RE/MAX said. September home sales fell 17.5 percent from August, but remained 0.5 percent higher than sales in September 2011. September is the fifteenth consecutive month with sales higher than the same month in the previous year. Of the 52 metro areas surveyed this month, only 29 saw higher sales than one year ago and just 6 saw double digit increases including: Albuquerque, NM +40.9 percent, Chicago, IL +24.1 percent, Raleigh-Durham, NC +22.1 percent, Providence, RI +22.1 percent, Nashville, TN +21.0 percent and Denver, CO +11.4 percent .