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The number of homes for sale continued to increase across the U.S. in October, a good sign for buyers—but with a catch. In many parts of the country, supply increased more among the most expensive homes than low- and mid-priced homes, according to the October Zillow Real Estate Market Reports. The inventory of for-sale homes in the bottom home-price tier rose year-over-year in 68.3 percent of the 353 total metro areas analyzed by Zillow, while inventory in the top home price tier rose in 82.2 percent, or 290 of the 353 markets analyzed. Inventory of all homes for sale nationwide increased by 15.8 percent year-over-year.
In Denver, there were almost four times as many homes available for sale in the upper price tier (priced at $357,900 or more) than there were homes priced in the lowest price tier (less than$219,000). The same was true in many other markets. Dallas, Atlanta, Phoenix and Nashville had at least two times more homes for sale in the top tier than the bottom tier.
In 25 of the 35 largest metros analyzed, there were more homes for sale this October than last October in all three price tiers. In 14 of those metros, the increase in number of homes for sale was in the double digits in all price tiers.
"Depending on their finances, it's likely that individual buyers in the same market might be having completely different home buying experiences. Even as conditions improve for buyers overall, it remains a tough row to hoe for first-time buyers and lower-income buyers, especially compared to their more well-off contemporaries," said Zillow Chief Economist Dr. Stan Humphries. "We expect more demand to come from the lower end of the market in coming years as millennials overtake Generation X as the largest home-buying demographic. As this happens, builders will be forced to build for these more entry-level buyers, and inventory at the bottom tier should improve, however slowly."
Overall, median U.S. home values rose 6.4 percent from October 2013 and 0.4 percent from September, to a Zillow Home Value Index (ZHVI) $177,500. Both monthly and annual home value gains were well below the faster paces recorded earlier in the year. Rising inventory and slowing home-value growth are two signs that the housing market is beginning to level off across the nation.
As the market has cooled, buyers looking for less expensive homes did find some relief in the hottest metro areas, including San Diego, Los Angeles and the Bay Area. In San Francisco, the number of low-priced homes on the market rose by 39 percent, but there were fewer high-priced homes on the market. While inventory was still tight there in October, the homes that were available spread evenly across the price spectrum.
National rents were up in October from a year ago, up 3.5 percent to a Zillow Rent Index (ZRI) of $1,337. Month-over-month, national rents were flat from September.