New listings of houses available for sale fell to their lowest number for a June month in seven years.
The Real Estate Institute's website, which accounts for about 95% of listings, recorded just over 9000 in June, an 18% decline from May.
The website says the stock of unsold houses on the market is now at a record low of 25 weeks compared with the long-term average of about 38 weeks.
Marketing manager for the website Paul McKenzie says the low number of new listings has pushed the total inventory down to that record low.
He says people are watching the market and there is a reluctance to put properties on the market particularly in Auckland, Wellington and Christchurch.
Despite supply tightening and the well-reported strong demand, asking prices eased 1% from the record set in May.
Mr McKenzie says good deals are available even though it is a sellers market, but buyers may need to change their expectations.
In the main centres, he says, this could mean reassessing how close they will live to the city centre.
He says over the next six to twelve months he expects prices to continue increasing.