Home buyers are finding fewer homes for sale that are meeting their price expectations. Half of all home buyers say they’re looking for a home priced under $288,000. But that is 9.1% below—or $27,000 less–than the median list price of currently available homes, a new realtor.com® study finds.
“The price difference between what buyers are searching for, closing on, and what’s available on the market demonstrates just how big the gap is for entry-level home buyers,” says Danielle Hale, realtor.com®’s chief economist. “Buying a first home has always been a challenge, but with such a slim number of entry-level homes available, it’s especially difficult now.”
The median sales price of homes purchased in April was $267,000, which is about 15% or $48,000 less than the price of the inventory currently on the market, according to National Association of REALTORS® data.
Realtor.com® researchers estimate that about 94,000 more homes priced between $100,000 to $340,000—or a 15% increase—are needed to satisfy the imbalance between what buyers want and what is available. However, it’s homes priced above $750,000 that have seen the most growth in inventory lately, rather than the lower end of the market, researchers note.
“Entry-level homes continue to be difficult to come by as the inventory composition shifts more and more toward higher-priced homes,” Hale says. “This is causing smaller and more affordable homes to appreciate rapidly, resulting in a mismatch between what buyers are able to spend and what sellers expect to receive.”
Smaller homes (those between 750 to 1,750 square feet) have appreciated 12.1%, or 3.5 times, faster than mid- to large-sized homes (3,000 to 6,000 square feet), realtor.com®’s analysis finds.
Where Buyers Are Having it Easiest, Most Difficult
Buyers are finding the smallest imbalance in their search for homes for sale in a few select markets. For example, realtor.com®’s analysis found that the markets where buyers are most likely to find what they want is Buffalo, N.Y., which has a median list price of $194,950, followed by Memphis, Tenn. ($219,950); Baltimore ($329,050); Pittsburgh ($189,950); and Philadelphia ($279,950).
On the other hand, the metros with the largest price imbalances are Cincinnati (which has a median list price of $275,045), followed by Houston ($324,950), Minneapolis ($370,050), Indianapolis ($284,950), and Atlanta ($339,050).