After taking a direct hit in 2012 during the economic slump, and then rising gently in 2013, the national inventory of homes for sale has jumped 11.8 percent in May. However, most of the homes were in the top and middle thirds of the market. Homes in the most affordable price bracket, most favored by first time homebuyers, has been falling year-over-year in 28 of the biggest metropolitan areas.
"Persistent inventory constraints at the low end of the market continue to make it a tough environment for first-time and lower-income homebuyers. Low inventory and high demand can lead to rapid price spikes, which makes homes even more difficult to afford for many buyers," said Stan Humphries, Chief Economist for Zillow.
The total number of homes listed for sale on Zillow in May was up 4.3 percent over April, and has risen month-over-month in the last three months on a seasonally adjusted basis.
First time buyers with traditional financing options are also competing with all-cash offers. In three of the top 30 metro markets - Miami, Tampa, and Detroit - more than 80 percent of all sales in the lowest third price bracket were cash sales
National home prices were up 0.1 percent from April to May, to a Zillow Home Value Index of $172,300, making it 28 straight months of increases, while national rents fell 0.1 percent, to a Zillow Rent Index of $1,310. Year-over-year, national rents were up 2.3 percent in May.