National housing supply down year-over-year for fifth straight month

Inventory of all homes for sale nationwide fell 6.5 percent from 2014

There were fewer homes for sale in June than there were a year ago, increasing competition for potential buyers, according to a Zillow Real Estate Market Report. The decline is mostly due to fewer lowest-valued homes sought by first-time homebuyers.

Among the bottom third of lowest-priced homes for sale, inventory fell year-over-year in 28 of the nation's 35 largest metro areas. By comparison, among the highest-priced homes, inventory fell year-over-year in only 10 of the nation's largest metro areas.

The total number of homes listed for sale on Zillow in June was down 6.5 percent year-over-year but was up 2.1 percent on a monthly basis. Large metros where inventory has increased the most annually include Austin (up 30.3 percent), Atlanta (22.4 percent) and Washington, DC (18.9 percent).

"Historically low mortgage rates continue to keep overall ownership affordability very good by historical standards, making it a great time to buy a home, especially with rent becoming increasingly unaffordable," said Zillow Chief Economist Stan Humphries. "Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage. But low inventory levels like those we're seeing across the country can bring the home-buying process to a screeching halt. In many markets, there just isn't a lot to choose from in terms of homes on the market."

Overall, home values in the United States rose 3.3 percent from June 2014, and 0.3 percent from May to a Zillow Home Value Index of $180,100. As home values continue to rise, buyers are faced with more challenges in a tighter market, especially in hot markets like Denver, which saw the highest home value appreciation from last year, surpassing San Jose and San Francisco.

Rents have also continued to rise in the second quarter, up 4.3 percent from this time last year to a Zillow Rent Index of $1,369.