Rising sales and low inventory helped push Seattle house prices up by 10.5 percent in May from a year earlier, according to a new report.

The median price of a house in the city was $425,500 in May, up from $385,000 a year ago, the Northwest Multiple Listing Service reported. The median price was just $500 lower this April.

The King County median house price was $362,000, up 4.9 percent from May 2011 and 0.6 percent from April 2012.

Sales of houses and condos rose by more than 24 percent from last year in the city and county. Pending sales, which don’t all close but can be the best indicator of recent activity, were up by 16.2 percent in Seattle and 22.5 percent countywide.

Meanwhile, the number of homes on the market dropped by more than 40 percent in the city and county. That amounts to 2.1 months worth of inventory at the current sales pace in Seattle and 2.5 months worth countywide, down from 4.3 and 5.2 months of inventory a year ago.

“Things that are in good condition are selling, they’re selling quickly, and they’re selling at good prices, from the seller’s point of view,” said Glenn Crellin, associate director of the Runstad Center for Real Estate Studies at the University of Washington.

So the bottom is clearly past, right?

“It’s still going to be pretty neighborhood specific, but we’re clearly past the bottom in some of the more desirable neighborhoods, Seattle and Bellevue, close to employment centers,” Crellin said.

Some neighborhoods are posting double-digit price increases from a year ago, he noted. “If you look at that selection of neighborhoods, that’s where a lot of people would like to be.”

Lenders are starting to work through a large backlog “distressed properties,” which have gone through foreclosure or are under threat to, Crellin said. “But we certainly haven’t cleared out all that inventory.”

Joe Spencer, area director for Keller Williams Northwest Region, said in a listing service news release that low inventory and interest rates will cause values to stabilize in more areas, while in others are already seeing modest increases.

“The six-month trend of low listing inventory continues to cause strong buyer competition for homes close to job centers,” he said.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said low supply and strong interest have created a “double quick action market” that draws “instant market activity from a backlog of home buyers” when market-ready homes are listed.

Also Monday, Seattle-based online real estate company Redfin reported that buyers in Seattle and nationwide see the market tipping in favor of sellers.

“The overwhelming sentiment among home-buyers is that there aren’t enough good homes for sale,” Redfin CEO Glenn Kelman said in the report.

This makes sense: with rents rising and many analysts claiming we are at or near a bottom in home prices, who would sell now if he didn’t have to? Conventional sellers haven’t stepped in to replace the liquidity that once came from banks dumping lots of foreclosures. In our own business, we are seeing website traffic slowing due to lack of inventory even as activity levels remain high among the customers we have.

Redfin’s survey of its customers found 45 percent of buyers in Seattle and 49 percent nationwide think it’s a good time to buy, down from 53 percent and 56 percent, respectively, in the first quarter of this year. Meanwhile, 29 percent in Seattle and 28 percent nationwide think it’s a good time to sell, up from 15 percent and 13 percent in the prior quarter.

Redfin found 63 percent of Seattle buyers and 58 percent nationwide think prices will rise this year, up from 55 percent and 34 last quarter. Redfin also reported that, in Seattle and across the country, low interest rates are the biggest buyer motivator, low inventory is the biggest concern and a big majority of people who have made offers on a home found themselves competing against other offers.

“This says to us that the U.S. real estate market will have limited sale volume growth due to low inventory and, as we have predicted many times before, that prices will probably continue to stabilize or increase modestly depending on the area,” the company said.

But there are caveats: buyers are very sensitive to increases in interest rates and other global economic events, like the possible collapse of the European currency. And outside of California, buyers are still fairly disciplined about prices.

The bottom-line in 2012 is that the global economy may drag down U.S. real estate, but it won’t be the other way around: in 2008 after all it was U.S. real estate that brought the global economy to its knees.

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