For the fourth straight month, the inventory of homes for sale has declined 0.4 percent annually in April, according to Zillow. Despite home values falling modestly month-over-month, inventory remains tight with 21 of the nation's largest 35 metros experiencing waning inventory.
After rising slightly to close out 2013, home inventory has been steadily declining ever since.
"First time home buyers are ready to buy, but unfortunately, aren't able to take advantage of the spring shopping season and low mortgage rates because of the lack of homes for-sale in their price range," said Zillow chief economist Dr. Stan Humphries.
National home values in April also showed a slight decline, dropping 0.1 percent from March. Zillow's Home Value Index reported a median value of $170,200, the first monthly decline in more than two years.
According to Zillow, more than half of metros in the U.S. currently have fewer homes for sale than last year at this time. In many metros, the company found that inventory is tightest at the lower end of the market, a common price point often desirable by first-time homebuyers.
Humphries commented, "This shortage of inventory is driven by a couple factors, most notably by stubbornly high negative equity, particularly at the lower end of the market, which is preventing many sellers from listing their homes."
The largest inventory declines occurred in Texas, with big drops in Houston (26.6 percent) and San Antonio (23.7 percent). Boston, Massachusetts rounded out the medal stand in third, experiencing a decline of 23.4 percent.
Home values also experienced a decline for the month. "Among the 35 largest metros covered by Zillow, home values in a dozen were down in April from March, and were flat in two more. Year-over-year, U.S. home values rose 5.3 percent in April," the company said.
Zillow's Home Value Forecast predicts that national home values are expected to rise another 2.2 percent heading towards April 2015. Metros that are expected to see the most appreciation over the year include Riverside, California (12.6 percent); Las Vegas, Nevada (8.7 percent); and Seattle, Washington (8 percent).