Resale inventory is at its lowest level in 18 years and new construction supply continues being outpaced by high demand, according to CoreLogic.
This inventory shortage comes at a time otherwise positive for the housing market, as demographic and economic factors, such as millennials moving into the market and household income increasing, continue progressing.
The months' supply, which illustrates how long it would take to sell the available inventory at the current sales pace, was about 3.8 months nationwide in March, which remained about the same from a year ago but well below its level during the Great Recession and much tighter than it was prior to the housing boom, according to a CoreLogic report.
By price bracket, entry-level housing inventory was especially tight. For starter homes, priced from 50% of the median sales price to 25% above it, there was only a three-month supply available in March. Comparatively, for more than double the country's median sales price, there was close to a seven-month supply.
For cities seeing strong job growth, like Denver, Seattle and San Francisco, there was only about two months' worth of housing inventory, making these markets ideal for home sellers.
Of the nation's largest metropolitan areas, Miami had the highest level of supply, with a reading of nine months. Most of the available inventory in the city is comprised of condominiums.
As the housing market remains in a supply drought, home prices continue to rise. Starter home values grew 10% year-over-year in March, pushing some entry level homebuyers out of the market. The cost for higher priced homes grew 6% annually.
Affordability has also become an issue for homebuilders, as the cost to acquire property has risen at a time when developers are also plagued by higher lumber prices, land shortages and regulatory burdens.