Homes in the lower tier of pricing are still 8 percent more expensive than at this time last year — and inventory has barely budged, according to a new analysis released Thursday by Zillow.

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House prices may have fallen nationally, but for renters long sidelined from the purchase market, becoming a homeowner may be tougher than ever.

The recent fall in home prices since the summer peak is mostly due to what’s happening in the upper and middle price tiers, Zillow’s data team found in a recent analysis. Homes in the bottom third of home prices were still worth 8 percent more than at this time last year.

This means the most affordable homes for first-time buyers are more expensive even after a year of significantly higher mortgage rates. And they’re still facing plenty of competition for a small inventory of home listings, Zillow found.

“Buyers shopping for the least-expensive homes this spring aren’t noticing much difference from the pandemic-era market heat,” Zillow Chief Economist Skylar Olsen said in the report. “Competition is fierce, but there aren’t many homes for sale, so buyers should be patient but prepared to move quickly and anticipate a bidding war once they find a home they love.”

The difference appears particularly stark when looking at the national recovery in home inventory — a process in which the bottom pricing tier is barely participating.

Over the last year, the number of middle-tier homes for sale rose by 8 percent, while upper-tier inventory rose by 13 percent as competition for both classes cooled significantly. But the most affordable tier of homes? They saw only a 1 percent increase in inventory.

This points to a reduction in new listings that rivals that of the decline in homebuyers — keeping competition for cheaper homes steady despite a much less affordable homebuying environment.

In fact, new listings in March were down 22 percent over the last 12 months, reaching record-low levels for this time of year, Zillow’s numbers show. And in the nation’s most expensive markets — such as the California Bay Area and other West Coast cities — lower-tier home inventory shrank by half over the last year.

Meanwhile, some parts of the country have seen home values remain sky-high in their lowest tier of price points. Seven of the nation’s 50 largest markets — including Tampa, Charlotte and Richmond — have seen their bottom-tier homes rise at least 60 percent in value since February of 2020.

Email Daniel Houston

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