US homebuyers may still feel pain despite strong economy, low rates: Here's why

The U.S. economy is strong – unemployment is near multi-decade lows – and mortgage rates are also low, but the housing market could still remain a challenge for prospective buyers.

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According to a new report from realtor.com, lower rates are calling buyers into the market – but may actually exacerbate inventory challenges.

In July, inventories were largely unchanged, while newly listed properties fell 7 percent year over year.

"July's data highlight tension in the housing markets between buyers eager to take advantage of lower mortgage rates and potential sellers concerned about slowing price growth," George Ratiu, realtor.com's senior economist said in a statement. "The decline in newly listed properties suggests that some would-be sellers are stepping back from the market, during the peak buying season, when most people are searching for their next home."

Inventory on the lower-priced end of the market –for first-time and entry-level buyers – is actually declining. In July, the number of homes priced below $200,000 fell nearly 10 percent year over year.

HGTV 'Flip or Flop' host Tarek El Moussa says people can afford to live in these areas

‘B-markets’ are becoming more popular for first-time homebuyers, said Tarek El Moussa.

That means prices are likely to grow faster in the coming months.

Some millennials, however, are successfully entering the market. The median home purchased by people this age was priced at $248,000 – while millennials’ share of mortgage originations climbed to 46 percent, from 43 percent last year.

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The median home price in July was $315,000 – a 5.5 percent year over year increase.