SAN FRANCISCO – March 22, 2016 – Gridlock in the housing market that's slowing first-time home purchases and trade-ups to better units is the chief reason for a persistent housing shortage, according to a new study.

The report by online real estate site Trulia casts doubt on the widespread belief that a scarcity of new construction is the main cause of a crunch that has driven up home prices and slowed sales.

Instead, the study says, a yawning price gap between midlevel and premium homes that's shutting out many move-up buyers is the biggest obstacle.

Also, a large share of entry-level homes are off the market because they're owned by investors or so-called "underwater" homeowners who owe more on their mortgages than their homes are worth, so they effectively can't sell, the study says.

"Gridlock in the mid- to low- end of the housing market is one of the main reasons for the low inventory," says Ralph McLaughlin, Trulia's chief economist and author of the study.

In January, there was a four-month supply of existing homes for sale in the U.S. well below a healthy six-month inventory, according to the National Association of Realtors. That drove up the median home price by 8.2% the past year, the biggest jump since last April.

Lawrence Yun, the Realtor group's chief economist, says the main reason for the skimpy supply is sluggish single-family housing starts, which hit an eight-year high of 715,000 last year, but was below a normal 1.2 million. McLaughlin disagrees, saying that new home sales represent less than 10% of all housing sales.

The study says the answer instead can be found mostly in the makeup of the existing home market. For example, the median list price of a premium home across the U.S. is $542,805, compared with $267,845 for a mid-priced home.

That gap is 17.3% higher than it was in 2012 and is keeping many mid-priced homeowners from trading up, McLaughlin says.

McLaughlin partly blames a wealth gap that has seen the incomes of the top third of U.S. households climb more dramatically than those in the middle. And the supply of starter homes is limited because many investors snatched those up when prices hit bottom in 2011.

Copyright © 2016, USATODAY.com, Paul Davidson

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