Home prices are less heated this spring, but the largest metropolitan markets are still overpriced.

About 40% of the nation's top 50 markets, based on the number of homes, were overvalued in March, according to a new report from CoreLogic, which defines an overvalued market as one in which prices are at least 10% higher than the long term, sustainable level. In those markets, 16% were undervalued and 44% were at value.

This is an improvement from just a few years ago, when more than half of the nation's biggest markets were overvalued, but it still poses a barrier-to-entry for a large share of would-be home buyers, especially first-time buyers.

On a national level, home prices rose 3.7% annually in March, according to the report, less than the 4% annual increase in February. Part of that is due to an increasing supply of homes for sale, but sellers are also finally coming to terms with reality. They are seeing their homes sit on the market longer because buyers simply can't afford the recent run-up in prices.

There is also a growing bifurcation in the market. High demand and short supply on the low end have kept prices high and slowed sales, while low demand and high supply on the high end has hit prices.

"The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters," said Dr. Ralph McLaughlin, deputy chief economist at CoreLogic. "But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds."

High prices not only keep current homeowners from moving, they have also stalled a large share of renters from becoming homeowners. Higher home prices keep more people renting, thereby driving rent demand and rental prices.

"The cost of either buying or renting in expensive markets puts a significant strain on most consumers," said Frank Martell, president and CEO of CoreLogic. "Nearly half of survey respondents – 44% of renters – cited the cost to rent in high-priced housing markets as the number one barrier to entry into homeownership. This is potentially forcing renters to wait longer to have the necessary down payment in these communities."

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