SEATTLE, July 22, 2016 /PRNewswire/ -- Homes are selling an average of a week faster than they did a year ago, meaning home shoppers should be prepared to move quickly in a competitive housing market, according to the June Zillow® Real Estate Market Reports.

Tight inventory continues to be a major factor for home shoppers. The supply of homes for sale is nearly 5% lower than it was a year ago, and 38% lower than its peak level in 2011. With fewer available options, home shoppers are moving quickly to buy homes, with the average U.S. home closing after 78 days on the market.

Zillow listing in Bumpass, Va.
Zillow listing in Bumpass, Va.

The 78-day average includes the time it takes to close, which is usually one or two months after the home goes under contract. This means that homes are pending within about a month of being listed.

The length of time homes stay on the market before selling has been steadily decreasing since 2010, when homes took an average of five months to sell. The average time home buyers had in Pittsburgh, Philadelphia and Charlotte, N.C. dropped by at least two weeks, the biggest change among the largest U.S. metros.

The low inventory and quick-moving market combine to create a competitive home shopping market, especially for potential buyers looking for less expensive homes. The most expensive third of the market has experienced the smallest drop in available inventory compared to the rest of the market.

"Homes are selling faster than ever as the home shopping season hits its peak," said Zillow Chief Economist Dr. Svenja Gudell. "If you're looking for a home, be prepared to move quickly. Adding to this difficult buying environment is low inventory – there simply aren't many homes to choose from. And while this looks like a good time to be a seller, potential move-up buyers may hesitate to list their homes and become buyers. Until the supply increases, it will remain a tough market to find a home."

Tips for buyers in a competitive market

  • Meet with your lender early and get preapproved for a loan – even before you begin seriously shopping for your new home.
  • Work with an agent who has expertise in the local market. Read reviews on local agents and find someone with a successful record in a tough market.
  • Request to pre-inspect a home before submitting an offer. You risk losing a few hundred dollars if you end up not wanting the house; but if you do, you'll be able to submit an offer not contingent on home inspections.
  • The limited supply of homes is driving home values higher. The average U.S. home is worth $187,000, a 5.4 percent increase from June 2015. Home values have been increasing at 5 percent or faster on an annual basis for the past eight months.

Rents are growing at the slowest pace in nearly two years, up 2.6% to a Zillow Rent Indexii of $1,409.