Trulia released its findings from the Trulia Inventory and Price Watch, which showed that the number of homes for the average first-time homebuyer saw its steepest year-over-year drop in three years, falling 12.1 percent since 2015. Moreover, these buyers will need to pay 1.9 percent more of their income on average to buy a starter-home in their local market.
Nationally, housing inventory fell for the sixth consecutive quarter, dropping 9.1 percent from a year ago. Across different housing segments, home buyers saw the biggest decreases in starter and trade-up home inventory. The number of starter homes and trade-up homes on the market dropped 12.1 percent and 12.9 percent from this time last year, respectively. Meanwhile, premium home inventory fell a more moderate 5.6 percent.
Declines in the affordability of starter homes continues to plague first-time home buyers. Currently, the average starter-home buyer will need to spend 38.5 percent of their monthly income to buy a starter home – a 1.9 percentage point increase from last year. This decline in affordability is more than twice as much for trade-up homes (up 0.9 percentage points) and nearly four times the amount needed to buy a premium home (up 0.5 percentage points). Comparatively, buyers of trade-up homes and premium homes would each need to spend just 25.5 percent and 13.9 percent of their income to buy a home, respectively.