Low inventory in the housing market has increased competition among home shoppers. According to the first quarter Zillow Real Estate Market Report, there were fewer homes for sale in June than one year ago and much of the decline came from the lowest-valued homes sought by first-time homebuyers.
"Historically low mortgage rates continue to keep overall ownership affordability very good by historical standards, making it a great time to buy a home, especially with rent becoming increasingly unaffordable," said Zillow Chief Economist Stan Humphries. "Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage. But low inventory levels like those we're seeing across the country can bring the home-buying process to a screeching halt. In many markets, there just isn't a lot to choose from in terms of homes on the market."
According to the report, in the lowest-priced third of homes for sale, the inventory of homes on the market fell year-over-year in 28 of the nation's 35 largest metro areas. Meanwhile, among the highest-priced homes, inventory decreased year-over-year in only ten of the nation's largest metro areas.
Zillow found that the total number of homes listed for sale on their website in June was down 6.5 percent year-over-year but was up 2.1 percent on a monthly basis.
Inventory increased the most annually in Austin (up 30.3 percent), Atlanta (22.4 percent) and Washington, DC (18.9 percent). Charlotte (-39.7 percent), San Antonio (-31.3 percent), and San Diego (-30.0 percent) experienced biggest decreases in supply of for-sale homes.
Overall, home values in the United States rose 3.3 percent from June 2014, and 0.3 percent from May to $180,100, according to a Zillow home value index. Rents have also continued to rise in the second quarter, up 4.3 percent from this time last year to $1,369, according to a Zillow rent index.
"As home values continue to rise, buyers are faced with more challenges in a tighter market, especially in hot markets like Denver, which saw the highest home value appreciation from last year, surpassing even San Jose and San Francisco," the report said.