The spring selling season is in full swing. Here’s a breakdown of what you need to know about the state of the housing market.

Home prices are surging

Price growth is only increasing, due to a lack of inventory in some markets. According to Lawrence Yun, NAR chief economist “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels.” Buyers in many areas need to be prepared for an increased amount of competition due to low housing inventory this spring.

Mortgage rates hold steady

30-year fixed rate mortgages remain at 3.7 percent, but that is likely to change. “Low mortgage rates are a welcome sign for those in the market to buy a home this spring season and will help to support homebuyer affordability,” says Len Kiefer, deputy chief economist at Freddie Mac.

Sellers are needed

It continues to be a seller’s market, as total housing inventory at the end of February increased just 1.6 percent to 1.89 million existing homes available for sale. For the second month in a row, unsold inventory is at a 4.6-month supply, below what is considered normal for a healthy market.

Buyers want move-in-ready properties

Despite the low housing inventory, buyers are picky about the condition of properties for sale and expect homes to be move-in-ready. “Buyers don’t want to assume any risk with properties that need work, particularly first-time buyers with limited cash resources,” says Budge Huskey, chief executive officer at Coldwell Banker Real Estate.

Foreclosures keep slipping

After peaking in 2006, foreclosures are returning to significantly low levels across the country. “Given that August 2006 was the peak of the housing bubble, this eight-and-a-half year low in foreclosure activity is a significant milestone and a sign that nationwide foreclosure activity is on track to return to historic norms this year,” says Daren Blomquist, vice president at RealtyTrac.

Investor slowdown

Competition between regular buyers and investors is decreasing. Home prices are getting so high that the share of home sales to investor clients recently reached a four year low.

Buying: it’s cheaper than renting

A recent study from NAR found that rents are on the rise in many parts of the country. “In the past five years, a typical rent rose 15 percent while the income of renters grew by only 11 percent,” says Yun. A recent study also showed that renters are spending around 30 percent of their wages on rent, compared to homebuyers who spend below 15 percent of their wages on mortgage payments.

A focus on first-time buyers

New programs from Fannie Mae and Freddie Mac seek to make it easier for first-time borrowers to buy a home. They recently introduced 3 percent down payment mortgages– the first time down payments have been this low on Freddie Mac loans in nearly five years. Besides this, Freddie Mac launched the “Our Home Possible Advantage Program”, which is aimed at supporting first-time buyers by allowing no minimum from borrowers in contributions, which means that parents or relatives now can cover 100 percent of the down payment through gifts.

Going green

Millennial clients are providing the push for home builders to downsize. According to the National Association of Home Builders, the average size of a new home is 10 percent less than the typical home five years ago. Younger clients are leading the push for green and energy efficient homes, according to a recent study by NAR