A deluge of off-lease vehicles and higher demand for older used vehicles is making for a beneficial market for buyers, according to the automotive site Edmunds.com.

In its Used Vehicle Market report for the first quarter of the year, the site says formerly leased new vehicles are holding less residual value and entering dealership inventories in greater quantities due to the recent popularity of leasing. Along with this surplus of three- and four-year-old vehicles, demand for more affordable older vehicles has increased, thus allowing these vehicle owners to get more money at trade-in.

"The leasing surge we've seen over the past few years is taking hold and changing the face of the used car market," said Ivan Drury, senior analyst at Edmunds. "With new vehicle sales already beginning to stagnate, swollen inventories of off-lease used vehicles hitting the market and priced to move may cannibalize new car sales and further strain residual values."

Edmunds determined that there were 10.19 million used vehicle sales in the United States in the first three months of 2017. This figure was down 1.2 percent from the first quarter of 2016. The average used vehicle sold during the quarter was 4.4 years old.

Used vehicle prices continued to hit record highs, with the average pre-owned vehicle selling for $19,227. This was up from approximately $18,800 in the first quarter of 2016 and $18,200 in the first quarter of 2015.

The report credits this high average to the fact that more of the vehicles on dealer lots are three years old or younger. Fifty-three percent of used vehicles sold in the first quarter of 2017 fell into this range, up from 41 percent in the first quarter of 2012 when the average used vehicle sold for about $16,400.

In addition, Edmunds says the higher manufacturer's suggested retail prices among new vehicles are starting to affect used vehicle prices as off-lease models enter this market. Older vehicles are also in greater demand, helping them to retain more of their value.

Three-year-old vehicles held an average of 64.5 percent of their value, down from 68 percent in the first quarter of 2010. The report says this steeper decline, coupled with higher MSRPs, means off-lease vehicles are often being sold for less than the value anticipated when the vehicle was new.

"Many car shoppers want to lease, so automakers are willing to lean on incentives to help make up the difference and keep payments in line with what consumers are accustomed to," said Drury. "But the pressure on the market is mounting."

The average age of a vehicle trade-in during the first quarter of the year was 6.4 years, which was essentially unchanged from the previous year. However, older vehicles are in greater demand as customers seek a more affordable monthly payment. While a six-year-old vehicle in the first quarter of 2010 retained only 37.8 percent of its original $29,500 value, a vehicle of the same age in the first quarter of 2017 retained 47 percent of its original $32,200 value – an increase of $2,900.

"Lease returns will continued to flood the market over the coming years, while older used vehicles are poised for higher prices due to the supply shortage," said Drury. "What this means for consumers is that it's a great time to weigh your options between buying a new or near-new used vehicle. Both sides are feeling the pressure of increasing inventories, so buyers are in a strong position to take advantage of great pricing and model availability."