It's a sellers'  housing market, but there are still ways to save as a first-time buyer.

5 things to know as a first-time homebuyer

Spring is here and Americans everywhere are emerging from winter hibernation mode, ready to accomplish the tasks they’d planned while safely ensconced from the cold weather. For first-time homebuyers, they’re entering a market that’s as hot as the summer sun.

For 60 consecutive months, home prices have risen on a year-over-year basis, according to the National Association of Realtors. Because demand is so high and supply is so low, asking prices are at record levels, now costing the typical buyer a median of $228,400. That’s 7% more than last year, when the national median was $212,100.

Listing agents like to remind their clients that real estate is a location game. In other words, “the norm” in one part of the country – like the West – may be something else in the South. However, if you’re considering getting off the sidelines to see what’s available, the following are a few important things to know when buying a house:

Inventory is down, but conditions are improving

According to data maintained by the NAR, as of February, roughly 1.7 million properties were listed as “for sale.” At the current sales pace, that’s the equivalent of 3.8 months, which isn’t very much compared to prior years. In other words, it’s a market that favors sellers more than it does buyers. However, construction is on the rise. Starts increased 3% in February to a seasonally adjusted annual rate of 1.2 million, according to data maintained by the Commerce Department. Granger MacDonald, chairman of the National Association of Builders, said he anticipates increased development to continue as 2017 progresses. Generally speaking, the more properties that are available to buy, the lower prices tend to be.

Mortgage pre-approval can help to simplify the homebuying process. Mortgage pre-approval can help to simplify the homebuying process.

Mortgage rates are up, but still affordable

Save for a handful of weeks, interest rates on 30-year fixed-term mortgages stayed below 4% for the entirety of 2016, according to data from Freddie Mac. That’s changed in 2017, having been north of this threshold since January. Naturally, this means it’s slightly more expensive to enter the housing market than it’s been more recently, but rates are well below where they once were, averaging nearly 5% for a 30-year FRM as recently as 2010. Housing experts believe interest rates will stay below 4% through the remainder of 2017, but may break above 5% in 2018.

“More than 85% think a 10% down payment is mandatory.”

10% down payment IS NOT required

One of the more effective ways to reduce mortgages expenses is with a substantial down payment, ideally 10% or more. However, unlike homeowners insurance – which is usually required – a 10% down payment isn’t mandatory, which comes as a surprise to many would-be buyers. In a recent NAR poll, 87% of respondents wrongly believed a 10% down payment was necessary for them to take out a mortgage. To the contrary, since 2013, the median has been just 6%.

Don’t forget property taxes

Budgeting for homeownership is a crucial component to determining just how much real estate can be purchased without breaking the bank. But what people often fail to account for is property taxes. In 2016, the average homeowner spent nearly $3,300 in annual property taxes, an effective tax rate of 1.1%. Rates were the highest in New Jersey, Illinois, and Texas, averaging slightly more than 2% in each.

Homeowners insurance should also be factored into the homebuying equation, and the premiums for this coverage) may be tax deductible. The Insurance Information Institute has some tips on how determine this.

Location looms large

As previously mentioned, where houses are up for sale may be the single biggest factor in terms of sales price. This is true not just from a state-to-state standpoint, but also in the city versus the suburbs. For instance, Texas residents who live in Austin proper spend nearly $8,000 more annually than suburbanites, according to a recent study performed by Zillow. For the nation as a whole, city dwellers typically spend $9,000 more per year.

With these tips for buying a house as a reference point, you can enter the market with an idea of what to anticipate and adjust your expectations accordingly.