India, Oct. 9 -- Nearly two years after U.S. housing inventory hit its lowest levels in recorded history, the market is showing signs it may be headed for another shortage, according to realtor.com latest report. Data show increased demand from lower mortgage rates prompted a 10 percent year-over-year decrease in available homes under $200,000 and halted 18 months of inventory gains in the mid-market last month.

National inventory of homes for sale continued to decline in September, posting a 2.5 percent decrease over this time last year, and a faster rate of decline compared to August's 1.8 percent decrease. Driven by strong demand and short supply, entry-level homes priced below $200,000 have been steadily decreasing since May of 2014,...