Texas single-family construction permits and existing home sales increased in January, while housing starts declined, according to the Federal Reserve Bank of Dallas.

After two months of decline, single-family housing construction permits rose 5.1% from December to January, while sales of existing homes rose 3.2%. Conversely, housing starts in Texas dropped 1% in January.

"The housing market has shown drastic increases in the past four to five months and this report is no surprise," said Judy Jones, the 2013 president of the MetroTex Association of Realtors.

The inventory of homes for sale continued to inch down to a 4.6-month supply in January, edging even further under the six-month-supply marker, which typically indicates a tight market and rising prices.

Published the Federal Housing Finance Agency, the housing price index for Texas increased 1.7% in the fourth quarter of 2012. It is also up 6.6% from last year.

Jones notes that if financing is available to builders and developers, new home starts could play a major role in increasing inventory levels. "We fully expect continued growth in the North Texas housing market through 2013," added Jones.

"While increases are positive and the market is seeing great progress, we are far removed from the levels we saw five to six years ago," said Jones.