First-time homebuyers face strong headwinds

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First-time home buyers and those looking to move up to a slightly more expensive home are in store for a tough spring season. That’s according to Zillow, which found that inventory is declining fastest among entry-level and mid-market homes in more than half of the largest U.S. markets.

Overall, the number of available homes for sale nationally fell 5.9 percent in March from a year earlier. But supply declined by a disproportionately large 10.4 percent in both the low-end and middle-priced ranges. Inventory ebbed just 1.9 percent in the most-expensive segment.

The decline in supply was much more marked in the Charlotte metro, Zillow reported. Local inventory dropped nearly 35 percent in both the lowest-priced and mid-priced segments, and fell 16.6 percent in the upper third.

The Charlotte metro was second, behind Portland, Oregon, for the largest drops in annual supply among 35 U.S. cities in March.

According to the Charlotte Regional Realtor Association, the Charlotte region had a 2.8-month supply of homes for sale in March, down from a 4.4-month supply a year earlier.

Six months of inventory is considered a balanced market, where neither buyer nor seller has the upper hand in negotiations.

The dearth of supply can be attributed to several factors. Many homeowners are hesitant to sell because rapid price appreciation means they would need more equity to cover a down payment when upgrading to a new house. Others are waiting for prices to increase more before they put their homes up for sale. Investors have also turned many homes into rentals, further depriving the market of properties for sale.

Zillow said the lack of inventory of more-affordable homes is pushing up prices for the budget-friendly shopper across the United States. Prices in the bottom tier are growing faster in 18 of the metros than they are in the other two segments.

In Charlotte, prices grew most quickly in the middle tier, by 5.1 percent last month compared with a year earlier. Prices rose 4.3 percent in the entry-level category, and 4.4 percent in the upper tier, Zillow said.

The Charlotte Regional Realtor Association said the average sales price in March in the Carolina Multiple Listing Services was $246,891, with the median price at $198,000.

The largest price gains nationally were seen in Denver, where the least expensive homes cost 20 percent more in March than they did a year earlier. Portland saw a 16 percent increase in the same category.