SAN DIEGO — Robert and Emerald Oravec were itching to sell their condominium late last year to move closer to a favorite surfing spot, but they were stuck. They owed the bank $194,000 and figured the most they could get was $180,000.

When they put their San Diego home up for sale a few months later, they fielded five offers within two weeks. It sold for $260,000 in May, allowing them to invest profits in a new home that's more than twice the size on a large lot and 40 minutes closer to the surfing beach.

“We're stoked,” said Robert, 50, a facilities engineer at Solar Turbines, a maker of gas turbines that has employed him for the last 22 years. “It was better to be patient and wait it out.”

Soaring prices are leaving fewer homeowners owing more money than their properties are worth, bringing them off the sidelines of the nation's surging housing market and offering relief to buyers who are frustrated by bidding wars. As more homes are put up for sale, price increases are expected to moderate.

Mark Fleming, chief economist at real estate data provider CoreLogic calls it “a virtuous circle.”

“The fact that house prices have increased so dramatically ... has unlocked a lot of that pent-up supply,” said Fleming, whose firm found markets with the largest percentage of “underwater” or “upside down” mortgages often have the lowest supply of homes for sale.

At the end of March, 19.8 percent of the nation's mortgaged homes were underwater, down from 23.7 percent a year earlier and 25 percent during the same period of 2011, according to CoreLogic. Gains spread across the country, though regions that rose high and crashed hard remained saddled with homeowners who bought near the peak.

Nevada had a nation-high 45.4 percent of mortgages underwater, followed by Florida at 38.1 percent, Michigan at 32 percent and Arizona at 31.4 percent. Montana had a nation-low 5.6 percent.

Among major metropolitan areas, Tampa Bay had a nation-high 41.1 percent of mortgaged homes underwater, followed by Miami at 40.7 percent. Dallas had a nation-low 8.3 percent.

Housing inventories remain unusually low.

There was a 5.2-month supply of existing, single-family homes for sale in May, compared to 6.4 months a year earlier, according to the National Association of Realtors. California had only a 2.6-month supply, compared to 3.6 months a year earlier and well below the six months that is considered a balanced market.

San Diego broker Colleen Cotter began knocking on doors this year after scouring property records to find homeowners who didn't owe money. If someone answers, she makes an all-cash bid on behalf of investors who don't even visit.

Nearly one of three homes sold in Southern California is paid for in cash, putting borrowers at a disadvantage. Some buyers write sellers about how they would cherish a home, hoping to spark a personal connection.