The job market and the economy continue to improve. Mortgage interest rates remain near historic lows. But despite that, the share of first-time homebuyers fell to its lowest point in nearly three decades, according to a new report by the National Association of REALTORS®.

NAR blamed the drop on a number of factors, including younger people carrying more student debt, but the trend could be preventing a healthier housing market from reaching its full potential, economists said.

The annual consumer survey additionally found that an overwhelming majority of buyers search for homes online and then purchase their home through a real estate agent, a trend that has been growing over the past decade.

The 2014 National Association of REALTORS® Profile of Home Buyers and Sellers found that 33 percent of buyers were first-timers, down from 38 percent a year ago and the lowest share since 1987.  Since 1981, the average has typically been about 40 percent.

NAR’s chief economist Lawrence Yun cited a number of obstacles young adults are facing on the road to homeownership. “Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” he said.

“Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”

Yun said that stronger job growth should eventually lead to higher wages, but he added that tight credit and the mortgage application and approval process continue to be a hindrance for young buyers.

“Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years,” he said.

What wasn’t highlighted in the report is the significant role that escalating home prices in markets like the Bay Area plays in the decline of first-timers. But perhaps that goes without saying.

Tremendously low inventory has served to keep prices moving significantly higher in many of our markets, even in the entry-level category. My hope is that if we begin to see inventory levels loosen up and return to normal, that could help keep prices within reach for our young adults – and give them a better chance to enjoy the American Dream of homeownership.

Below is a market-by-market report from our San Francisco Bay Area offices:

North Bay – Our Greenbrae manager says the local market is experiencing a slight slowdown but still fraught with lack of inventory, making it very difficult for those buyers who want to close on something by year’s end.  Agents are seeing more deals that were multiple offers falling out of escrow.  It seems buyers are eager to jump in and sometimes experiencing a quick buyers’ remorse.  Open houses are still seeing lots of activity. The Previews luxury market is still steady and good properties are receiving good activity and sometimes multiple offers.  Open homes are still well attended with a lot of out-of-the-area buyers looking in Sonoma County. Country properties one acre and up are in demand. There’s been an uptick in buyers searching $900,000 -3,000,000 range. Our San Rafael manager reports that the market is having an end-of-the-year rush.  Usually at this time the market starts to fall off but this year after quite a few slow weeks we are seeing an increase in sales, which is a-typical for this market. Our Santa Rosa Mission office manager notes that the local market is active, with some signs of a seasonal slowdown. There are multiple offers on the most attractive, well located and best-valued properties. According to our Southern Marin manager, the local market has started its seasonal slowdown as evidenced by fewer listings coming onto the market. However, agents are still experiencing over 50% multiple offers. The most desirable properties are receiving multiple offers and then the numbers drop way off for dated inventory, overpriced property and homes is poor to fair condition. The Previews market over $3 million is steady.

San Francisco – Our Lakeside manager says picky buyers and recalcitrant sellers have slowed down the pace a bit.  At the same time, most transactions have multiple offers.  Some agents are helping their clients negotiate by keeping an eagle eye on listings that have not sold after one or two weeks. Our Market Street manager notes that as we approach Thanksgiving, the inventory of new listings has taken a definite decline.   However, buyers are still out there, and most homes that ratified during this period did so with multiple offers (ranging from 2 to 8).   One agent unsuccessfully offered on an under-priced condo in need of remodeling/updating, and found themselves up against 21 offers.    With some exceptions, the sense is that most sellers are now shifting into holiday mode, and will be holding offer their properties off the market until next year.

SF Peninsula Burlingame currently has 17 active and 12 pending listings. As we settle into the Thanksgiving weekend the inventory is light but the smart buyers will be out waiting for the perfect home and ready to take advantage of less competition. Open homes continue to be well attended as the pool of buyers awaits each new listing. Hillsborough is settling in for the Holiday Season and listing inventory is low. There are only 34 active and 5 pending listings.  Half Moon Bay area sales activity increased during this week.  Our office listing activity increased a bit, but overall in San Mateo County listing inventory is lower than week before. Our Menlo Park manager reports that inventory is very low and very few listings seem to be coming. The pressure on buyers is enormous and she doesn’t see where enough listings will be coming from. There is no doubt that Silicon Valley is in the midst of a unique Renaissance and no one knows how long it will last. Our Palo Alto manager says overall inventory is at a historic low.  However, our office has been successful in a number of multiple offer situations.  Our Redwood City-San Carlos manager reports an extremely quiet time in the market place. Lack of inventory is causing the sale price of properties to continue to escalate when there are multiple offers. There always seem to be several all cash offers. Our office did close one transaction last week that was an all cash $160,000+ over asking and a five day close. It’s a very unpredictable market. Our Woodside-Portola Valley manager says inventory is just about non-existent.  There just are very few new properties.

East Bay – Open houses still heavily attended in Berkeley area with 50-100 groups. Multiple offers on every transaction. Home in Albany was listed for $649k, sold for $921k. Another property LP: $1.25m, SP: $1.46m. Inventory is low but buyers are still very active. Slow down for the holidays has not happened yet. Our Danville manager says there has been a surprising uptick in sales activity in the first two weeks of November.  Buyers are buying! There has been an increase in Previews properties in the Fremont Glenmoor area.  Our Oakland-Piedmont manager says that as we go later in the year it is a bigger challenge getting buyers into contract as the inventory dwindles ever lower. Asking for backup position is the theme of the day as the number of offers is inching up again. Of the offers ratified in the last couple of weeks, four have been as a result of preemptive strikes. Interestingly enough there are a few listings out there whose offer dates come and go without an offer within a few days when the word gets out a couple of offers come in and it’s gone. Shows that people are shying away if they think it’s going to go way over. Lots of activity at the open houses. Inventory is very low in the Walnut Creek area. Homes being put on the market at the right price are being offered on immediately with multiple offers and some going over asking.  Homes being put on at prices too high are selling for less.  Buyers are being very cautious about over bidding.

Silicon Valley – Agents are working hard despite the upcoming holidays, our Cupertino manager notes. Lack of inventory continues to be a challenge.  Listings are declining in Los Altos, Los Altos hills and Mountain View. Homes under $2 million almost non-existence for SFR. Los Altos 2 weeks ago, two newer homes on 11k lots both had multiple offers. Listed in mid $4M, both sold over $5M. Remodeled 2400 sq ft house listed at $2.4M sold over $3M again multiple offers. Los Altos hills had two sales over $4M, and another house had 14 offers listed at $3M and sold mid $4m range. Mountain View still little inventory and sales all over list with multiple offers. Condos are seeing same activity and all multiple offers. Buyers continue to compete for properties in Los Gatos due to the fact that inventory is down 42% from the same time last year.  There are currently eight homes for sale in Los Gatos (area 16) that are located in the Los Gatos school district under $2 million dollars.  Opportunities to buy into the Los Gatos school district are still available in the Los Gatos Mountains (area 23).  There are currently 11 homes for sale in The Los Gatos mountains with Los Gatos schools under $2 million dollars. Listings in the Almaden and Blossom Valley areas of San Jose are up from 2 weeks ago but still low due to the slowdown in sales activity. Our San Jose Main office manager says the San Jose market is seeing a seasonal slow down. Listing inventory in Santa Clara County is dropping close to the 1000 mark and we expect it to dip below that in the coming month. Open houses have been lighter in attendance as well. While multiple offers are still common, they don’t seem to have the same number of offers as two months ago. Overall prices are leveling off and we are seeing more offers that have contingencies as well as are contingent upon another sale. The local Willow Glen market continues to experience contracting inventory. There’s just not enough active inventory to meet still a strong buyer demand. Last week our office had nine new listings come to the market and five of them sold within five days, and one was an offer market sale. Agents are on a week-to-week watch as the holiday season quickly moves in with the Thanksgivings holiday week starting next week.

Santa Cruz County – The number of new listings hitting the market has been steadily decreasing since July, when the county peaked at 347 new listings on the market.  October saw a total of 193 homes new to the market and about halfway through November there have been 110 new listings on the market. The number of homes sold peaked this year in July with 253 sold, and has been slowly declining.  208 homes were sold in October and about halfway through November 93 homes have been sold.  Overall the inventory has been light in comparison with previous years and the number of homes sold has been relatively steady.  Demand has stayed strong in recent years, which has caused our average sales price to increase from a low of $501,564 in 2011, to the year to date average sales price of $692,789. The number of homes on the market over $1,000,000 in Santa Cruz County has been steadily decreasing since May, where it peaked at about 55.  The number of homes over $1,000,000 that have sold has been relatively steady since May, with anywhere from 30-40 homes sold per month in the county. November is on track to match the past 3 months for about 30 homes over $1,000,000.

Monterey Peninsula – The mid to $1 million dollar price point has seen an increase in the Monterey Peninsula market with trade up and new-to-the-area buyers. Many are moving for the desirable Carmel school district. This price point had been slow the first 6 months of the year, and agents are happy to see that this is finally picking up the pace. Inventory continues to be tight but that seems to be the new normal and agents look forward to a new listing push for the new year. Our office’s mid-month results show that sales volume and units are trending up over same time last year. The Previews inventory and closings is continuing on a steady pace especially in the Carmel and Pebble Beach markets. The vacation homebuyer continues to purchase properties as an investment that they get to enjoy in this scenic area.