Values in the top third of the market climbed 4 percent in May from a year earlier, compared with an 8 percent increase for the least-expensive houses, Zillow said in a statement Thursday. The supply of starter-home listings plunged 9 percent, while the number of top-tier offerings was little changed.
The lower end of the housing market is starving for listings as homebuilders focus on more-profitable luxury projects and negative equity keeps many owners of less-expensive properties from selling. At the same time, global economic turmoil and stock market volatility are hurting demand for luxury homes.
“The top of the market is starting to stabilize, and people are beginning to take notice,” Svenja Gudell, Zillow’s chief economist, said in the statement. “Buyers looking for entry-level homes are having bidding wars in many markets, while it’s not uncommon for high-priced homes to stay on the market a few months longer.”
Since the beginning of 2015, listings for the top-tier homes have had the most price cuts, according to Zillow.
Prices for entry-level homes in the U.S. are rising at twice the pace of the costliest properties as competition among first-time buyers intensifies, according to an analysis by Zillow.