The usually strong spring housing market could be far stronger this year, if only there were more homes for sale.
The number of listings continues to drop, as demand outstrips supply and potential sellers bow out, fearing they won't be able to find something else to buy.
The inventory of homes for sale nationally in April was 3.6 percent lower than in April 2015, according to the National Association of Realtors. Redfin, a real estate brokerage, also recently reported a drop in new listings.
The supply numbers are even tighter in certain local markets: Inventory is down 32 percent in Portland, Oregon, from a year ago; down 22 percent in Kansas City; down 21 percent in Dallas and Seattle; down 17 percent in Charlotte, North Carolina; down 12 percent in Atlanta; down nearly 10 percent in Chicago; and down 8 percent in Los Angeles, according to Zillow. Houston and Miami are seeing big gains in supply, due to economic issues specific to those markets.
"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. There still aren't enough homes on the market to keep up with the high demand from every type of homebuyer."
Where home prices are surging the most
| Metropolitan Area | Zillow Home Value Index (ZHVI) | YoY Home Value Change | Percent Inventory Change for All Homes | Bottom-Tier Percent Inventory Change | Middle-Tier Percent Inventory Change | Top-Tier Percent Inventory Change | Condo Percent Inventory Change |
|---|---|---|---|---|---|---|---|
| Denver, CO | $336,600 | 15.2% | 0.1% | -2.3% | 15.3% | -4.8% | 6.8% |
| Portland, OR | $325,400 | 15.1% | -31.6% | -39.8% | -39.0% | -21.6% | -43.5% |
| Dallas-Fort Worth, TX | $183,700 | 12.6% | -21.0% | -32.1% | -35.1% | -11.9% | -33.6% |
| San Jose, CA | $962,400 | 12.3% | 1.3% | -3.8% | 3.2% | 5.8% | 7.1% |
| Seattle, WA | $386,300 | 11.6% | -21.1% | -28.5% | -20.9% | -15.6% | -23.9% |
| Miami-Fort Lauderdale, FL | $232,800 | 10.5% | 18.0% | 10.3% | 16.6% | 21.9% | 28.7% |
| San Francisco, CA | $806,800 | 10.0% | -2.1% | -14.9% | 0.1% | 6.1% | 11.9% |
| Tampa, FL | $165,600 | 9.7% | -16.2% | -27.9% | -19.3% | -8.1% | -12.8% |
| Austin, TX | $250,400 | 8.9% | 2.6% | n/a | n/a | n/a | 20.6% |
| Phoenix, AZ | $220,600 | 8.8% | -8.0% | -20.2% | -6.6% | -4.1% | -15.6% |
Source: Source: Zillow
The short supply is pushing home prices higher than expected this year. Zillow had predicted 2 percent growth in home values from April 2015 to April 2016, but its latest data show values currently soaring more than twice that, at 4.9 percent.
"In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. 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," added Gudell.
The inventory drops are most severe in the lower-priced tier of the market. Homes in the top tier are seeing gains and therefore show more price cuts. Sixteen percent of top-tier homes had a price cut over the past year, compared with 11 percent of bottom-tier homes and 13 percent of middle-tier, according to Zillow.