A new report from online real estate marketplace Zillow Inc. shows the number of homes for sale nationwide fell 19.4 percent during the year ending Sept. 30.

The Zillow Research report divides inventory on the site into three price tiers for each market covered. Nationwide, the upper tier showed the highest reduction in inventory at 22 percent, followed by the middle tier at 18.6 percent and the bottom tier at 15.3 percent.

A new report from online real estate marketplace Zillow Inc. shows the number of homes for sale nationwide fell 19.4 percent during the year ending Sept. 30.

The Zillow Research report divides inventory on the site into three price tiers for each market covered. Nationwide, the upper tier showed the highest reduction in inventory at 22 percent, followed by the middle tier at 18.6 percent and the bottom tier at 15.3 percent.

But in California, lower-priced homes, represented by the bottom tier, saw a greater drop in inventory — 42.7 percent — than the middle and upper tiers, which saw drops of 37.4 percent and 31.9 percent, respectively. That indicates a tight market for first-time homebuyers, who can typically only afford homes in lower price tiers.

"First-time homebuyers are being squeezed out of the market by falling inventory and the rapid influx of investors looking to buy basic homes to rent out to the growing population of people who have recently been foreclosed upon," said Stan Humphries, Zillow chief economist. "Investors are paying in cash and can close sooner, which is more favorable to banks and homeowners looking to sell."

Low inventory, across all price points, in California will continue to slow the real estate market’s upturn in the state, according to a recent forecast from the California Association of Realtors.

Among 101 metro areas covered in the report, inventory across all tiers dropped the least in the Hartford, Conn. (-4.6 percent), Albuquerque, N.M. (-4.9 percent) and New Haven, Conn. (-5.5 percent). One market — Little Rock, Ark. — saw a slight, 0.4 percent, increase in inventory.

Annual inventory changes, California

Area Bottom tier Middle tier Upper tier All homes
California
-42.7%
-37.4%
-31.9%
-37.5%
Bakersfield, Calif.
-20.2%
-42.5%
-34.0%
-33.4%
Fresno, Calif.
-59.7%
-55.2%
-40.4%
-49.4%
Los Angeles
-45.1%
-37.9%
-29.2%
-37.1%
Modesto, Calif.
-50.5%
-44.4%
-33.6%
-41.0%
Riverside, Calif.
-44.2%
-43.8%
-30.5%
-38.7%
Sacramento, Calif.
-55.4%
-48.0%
-28.4%
-42.4%
San Diego
-45.4%
-44.6%
-33.0%
-40.7%
San Francisco
-53.2%
-42.8%
-35.0%
-42.2%
San Jose, Calif.
-47.5%
-35.9%
-32.7%
-38.4%
Stockton, Calif.
-48.7%
-49.2%
-39.3%
-44.8%
Ventura, Calif.
-42.1%
-34.4%
-31.0%
-34.8%

Source: Zillow

In the largest 30 metro areas, California metros saw the biggest inventory drops across all price tiers, with Sacramento (-42.4 percent), San Francisco, (-42.4 percent) and San Diego (-40.7 percent) leading the way. Among those markets, inventories were down the least Cincinnati (-9.5 percent), Portland, Ore. (-10.8 percent) and St. Louis, Mo. (-14.5 percent).

Annual inventory changes in 30 largest metros covered by Zillow

Metro area
Bottom Tier
Middle Tier
Upper Tier
All Homes
United States
-15.3%
-18.6%
-22.0%
-19.4%
Los Angeles
-45.1%
-37.9%
-29.2%
-37.1%
Chicago
-11.5%
-21.0%
-19.2%
-17.6%
Dallas-Fort Worth, Texas
-17.6%
-21.4%
-20.5%
-20.3%
Philadelphia
-7.1%
-19.9%
-22.1%
-17.4%
Houston
-7.8%
-25.7%
-25.7%
-21.8%
Washington
-32.0%
-22.5%
-16.4%
-23.3%
Miami-Fort Lauderdale, Fla.
-33.2%
-33.9%
-34.4%
-34.0%
Atlanta
-40.4%
-35.3%
-23.7%
-31.7%
Boston
-21.4%
-20.3%
-19.1%
-20.2%
San Francisco
-53.2%
-42.8%
-35.0%
-42.2%
Detroit
-12.7%
-15.5%
-21.1%
-16.9%
Riverside, Calif.
-44.2%
-43.8%
-30.5%
-38.7%
Phoenix
-57.1%
-33.6%
-30.1%
-38.4%
Seattle
-37.4%
-18.5%
-15.3%
-22.6%
Minneapolis-St. Paul, Minn.
-34.7%
-31.2%
-28.6%
-31.1%
San Diego
-45.4%
-44.6%
-33.0%
-40.7%
Tampa, Fla.
-19.8%
-23.3%
-24.6%
-22.9%
St. Louis
-8.7%
-19.1%
-15.1%
-14.5%
Baltimore
-24.1%
-23.0%
-18.7%
-21.7%
Denver
-32.3%
-32.5%
-30.8%
-31.7%
Pittsburgh
-10.0%
-10.9%
-26.7%
-17.8%
Portland, Ore.
-7.4%
-10.4%
-12.7%
-10.8%
Sacramento, Calif.
-55.4%
-48.0%
-28.4%
-42.4%
Orlando, Fla.
-24.6%
-32.5%
-23.3%
-26.2%
Cincinnati
-5.6%
-6.8%
-14.9%
-9.5%
San Antonio
-6.5%
-28.5%
-22.1%
-20.1%
Cleveland
-13.3%
-15.3%
-18.5%
-15.9%
Kansas City, Mo.
-29.1%
-35.1%
-42.7%
-37.3%
Las Vegas
-37.7%
-39.4%
-29.8%
-35.4%
San Jose, Calif.
-47.5%
-35.9%
-32.7%
-38.4%

Source: Zillow

Yesterday, Zillow launched a rental marketplace for property managers, agents and landlords to help them manage and market their listings for free and a paid subscription service that extends listing distribution, provides an email marketing platform and credit screening.

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