Fewer homes for sale over the past year have driven prices up faster than expected, according Zillow’s latest Real Estate Market Report.
According to the report, while the number of houses for sale nationwide dropped by 3.4 percent over the past year, housing prices rose almost 5 percent. Last year, Zillow predicted a 2 percent growth by this April.
Unsurprisingly, buyers looking for higher-end homes will have more options, and those looking to buy less expensive or entry-level homes will find an increasingly limited supply and rising prices. The number of entry-level homes for sale is down almost 8 percent over the past 12 months, and this coupled with still-low mortgage rates and increasing wages nationwide are creating stiff competition for homes, the report states.
The report also found that 16 percent of top-tier homes had a price cut over the past year, compared to 11 percent of bottom-tier homes and 13 percent of middle-tier.
The most exaggerated example of the low inventory/higher prices dynamic was in Portland, where the number of homes for sale over the past two years has dropped almost 40 percent and the value of those sold has risen by 15 percent over the past 12 months. Zillow found similar trends in Dallas, Seattle, and Denver, where inventory is down more than 20 percent and home value growth is in the double-digits.
Some markets showed a less exaggerated picture. Indianapolis posted an 18 percent drop in total homes available but only a 2 percent rise in prices over the past year, while Kansas City sold 22.5 percent fewer houses, but saw prices rise by 5.5 percent.
Some markets posted a rise in homes available over the past month, but there is no pattern. Highly sought-after markets like San Diego and Austin rose, as did long-troubled metros like Baltimore and Pittsburgh, but all metros with more homes to sell also posted rises in home prices. Miami-Fort Lauderdale saw the biggest inventory rise, at 18 percent. Home values there rose a little more than 10 percent.
"The struggle will continue for home shoppers this summer," said Zillow Chief Economist Svenja Gudell. "New construction has been sluggish over the past year; we're building about half as many homes as we should be in a normal market.”
Gudell added that there still aren't enough homes on the market to keep up with the high demand from every type of home buyer. “This summer's selling season's borders will most likely be blurred again as many buyers are left without homes and will need to keep searching," she said.