Even as Inventory Surges in May, First-Time Home Buyers Remain Challenged As Affordable Homes for Sale Fall

Inventory gains mostly concentrated in middle and upper home value tiers; Annual home value gains slow to lowest pace in a year, according to Zillow Real Estate Market Reports

- Inventory of all for-sale homes nationwide rose 11.8 percent year-over-year and 4.3 percent month-over-month in May, but fell among lower-tier homes in most large markets.

- The Zillow Home Value Index rose to $172,300, up 0.1 from April and 5.4 percent in May 2013.

- National rents fell slightly in May from April, down 0.1 percent to a Zillow Rent Index of $1,310.

News provided by

Zillow, Inc.

Jun 23, 2014, 08:00 ET

SEATTLE, June 23, 2014 /PRNewswire/ -- After plunging throughout 2012 and for much of 2013, and rising only modestly through the beginning of this year, the inventory of all for-sale homesⁱ nationwide spiked in May, jumping 11.8 percent year-over-year according to the May Zillow® Real Estate Market Reportsⁱⁱ.

But most of those gains in inventory were made among homes priced in the middle and top one-third of home values. The number of homes available for sale in the most affordable price bracket, those homes most sought by first-time homebuyers, fell year-over-year in 28 of the nation's largest metro areas analyzed by Zillowⁱⁱⁱ.

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 each of the past three months on a seasonally adjusted basis. Overall inventory of for-sale homes was up year-over-year in 506 (78 percent) of the more than 600 metro areas analyzed by Zillow. Large metros where inventory has increased the most include Las Vegas (up 51.5 percent year-over-year), Washington, DC (up 45.7 percent year-over-year) and Riverside, Calif. (up 42.7 percent year-over-year).

"It's good to see overall inventory rising. It's likely that many would-be sellers have decided to capitalize on recent home value gains, particularly as the pace slows, and list their home for sale now in order to move into a new home while mortgage interest rates remain low," said Zillow Chief Economist Dr. Stan Humphries. "But 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 make homes even more difficult to afford for many buyers. Hopefully the inventory gains we're seeing in the middle and upper tiers of the market will begin trickling down to the most affordable homes soon."

In addition to low numbers of affordable homes for sale, first-time and lower-income homebuyers armed with traditional financing are also competing with all-cash buyers at the lower end of the market. Zillow reported last week^iv that in 27 of the top 30 metros analyzed by Zillow, more than one third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros – Tampa, Detroit and Miami – more than 80 percent of all sales in the lowest price bracket were cash deals.

National home values in May were up 0.1 percent from April to a Zillow Home Value Index (ZHVI)^v of $172,300, and have now risen for 28 consecutive months. Year-over-year, U.S. home values rose 5.4 percent in May, the slowest annual pace of appreciation in more than a year. For the 12-month period from May 2014 to May 2015, national home values are expected to rise another 2.9 percent to approximately $177,321, according to the Zillow Home Value Forecast^vi.

National rents fell slightly in May from April, down 0.1 percent to a Zillow Rent Index^vii of $1,310. Year-over-year, national rents were up 2.3 percent in May.

	Zillow Home Value Index			Change in Inventory, by Price Tier
Metropolitan Area	May 2014 ZHVI	Month-Month % Change	Year-Year % Change	YoY % Change in For-Sale Inventory, Bottom Tier	YoY % Change in For-Sale Inventory, Middle Tier	YoY % Change in For-Sale Inventory, Top Tier
United States	$172,300	0.1%	5.4%	N/A	N/A	N/A
New York/Northern New Jersey	$372,700	0.2%	5.6%	1.5%	-1.3%	-0.2%
Los Angeles, CA	$530,000	1.6%	14.9%	6.0%	2.2%	-8.2%
Chicago, IL	$181,600	-0.3%	7.2%	-3.4%	3.2%	0.2%
Dallas-Fort Worth, TX	$144,600	0.4%	6.4%	-0.7%	-1.2%	2.0%
Philadelphia, PA	$194,700	-0.3%	2.4%	-1.1%	0.6%	0.5%
Houston, TX	$151,700	-1.5%	0.1%	N/A	N/A	N/A
Washington, DC	$352,800	0.2%	7.3%	2.0%	4.1%	-6.1%
Miami-Fort Lauderdale, FL	$195,500	1.0%	16.3%	1.9%	1.0%	-2.9%
Atlanta, GA	$145,400	1.3%	16.4%	-1.8%	4.5%	-2.8%
Boston, MA	$359,400	0.4%	7.6%	-0.8%	-0.7%	1.6%
San Francisco, CA	$683,900	1.4%	15.5%	8.4%	-1.2%	-7.2%
Detroit, MI	$110,100	0.9%	17.3%	-5.8%	2.1%	3.7%
Riverside, CA	$274,700	2.0%	21.9%	-0.4%	5.9%	-5.4%
Phoenix, AZ	$195,100	1.3%	8.1%	-1.1%	1.1%	0.1%
Seattle, WA	$332,000	1.4%	12.5%	5.3%	1.0%	-6.2%
Minneapolis-St Paul, MN	$201,200	-0.2%	6.6%	-3.3%	0.7%	2.6%
San Diego, CA	$464,600	1.3%	12.7%	-7.5%	2.1%	5.5%
St. Louis, MO	$131,100	-0.2%	-1.6%	-2.3%	2.1%	0.2%
Tampa, FL	$142,000	1.6%	15.0%	-2.9%	2.6%	0.3%
Baltimore, MD	$236,300	-0.3%	2.3%	-0.8%	2.9%	-2.1%
Denver, CO	$253,300	0.0%	8.3%	-1.0%	-4.5%	5.5%
Pittsburgh, PA	$120,900	-0.2%	6.7%	1.6%	-0.5%	-1.1%
Portland, OR	$271,800	0.7%	10.5%	1.3%	3.3%	-4.7%
Sacramento, CA	$316,700	0.7%	14.9%	-3.4%	1.7%	1.7%
San Antonio, TX	$148,800	-1.5%	-0.5%	N/A	N/A	N/A
Orlando, FL	$161,300	1.1%	15.0%	-0.8%	3.0%	-2.2%
Cincinnati, OH	$132,300	0.3%	3.0%	-0.6%	-0.2%	0.8%
Cleveland, OH	$118,500	0.3%	2.8%	0.0%	-2.2%	2.1%
Kansas City, MO	$141,100	-1.1%	-2.1%	-0.4%	-3.4%	3.8%
Las Vegas, NV	$180,800	2.6%	23.3%	N/A	N/A	N/A
San Jose, CA	$801,200	1.8%	15.1%	7.4%	-3.3%	-4.1%
Columbus, OH	$142,700	0.9%	9.5%	-0.8%	0.5%	0.3%
Charlotte, NC	$154,000	1.0%	7.0%	0.1%	2.5%	-2.7%
Indianapolis, IN	$133,000	-0.9%	1.9%	-0.9%	-1.5%	2.4%
Austin, TX	$217,400	-1.0%	5.0%	N/A	N/A	N/A

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage Marketplace, Zillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and StreetEasy®. The company is headquartered in Seattle.

Zillow.com, Zillow, Zestimate, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads is a trademark of Zillow, Inc.

ⁱ Each week, a count of the number of single-family, condominium and cooperative housing units listed for sale on Zillow is taken. The median of these values within a month is calculated as the monthly value. Because inventory can be seasonal, a seasonally adjusted value is reported using a standard STL procedure. This seasonally adjusted series is then smoothed using a three-month rolling average. More information is available at www.zillow.com/research.
ⁱⁱ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.
ⁱⁱⁱ Zillow analyzed inventory by price tier in the nation's 44 largest metro areas for which data were available. Inventory in the lowest price tier fell in 27 of the 44 metros, and was flat in another two.
^iv http://zillow.mediaroom.com/2014-06-19-Share-of-All-Cash-Home-Purchases-Falls-in-Most-Areas
^v The Zillow Home Value Index is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
^vi The Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and for more than 250 markets across the country.
^vii The Zillow Rent Index is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.