First-time homebuyers are seeing some relief in affordability, but the market remains broadly challenging compared with pre-pandemic levels. A new Realtor.com analysis reported through Fox Business finds that the typical starter home cost rose from about $256,000 in 2019 to $344,000, while the share of listings priced under $350,000 fell from 55% to 37.6% over the same period. The deterioration in affordability has been most pronounced in many traditional entry points, even as pockets of improvement emerge.
Hannah Jones, senior economist at Realtor.com, told FOX Business that the market for starter homes has shifted dramatically since the pandemic, driven by higher mortgage rates and tighter inventories. “Factoring in mortgage rates, the income needed to qualify has risen from $43,000 to $78,000, a jump that incomes haven't matched, and monthly payments are up more than 80% since 2019,” she said. She added that the increased cost has pushed the profile of typical buyers toward higher-income households who can qualify at current rates, while lower-income buyers have largely been priced out.
The practical effect, Jones noted, is that today’s starter home buyer increasingly resembles the move-up buyer of a decade ago. The shifts have contributed to an aging profile: the average age of a first-time buyer rose toward 40, with the share of first-time buyers lingering around 30% a year ago and rebounding to about 35% in May. The mortgage rate environment remains a key impediment to broad-based entry, even as some regional metrics show relief.
The market’s regional disparities are pronounced. The South stands out as the clearest bright spot, with starter-home prices down roughly 3.5% from their peak and roughly 170,000 more listings under $350,000, supported by busy Sun Belt construction. In the West, prices have corrected more slowly, down about 7.3% from peak levels, with gains concentrated in markets such as Phoenix and Denver rather than coastal California. The Midwest remains the most affordable region, though its edge is narrowing as prices rise about 10% since 2022. The Northeast remains the most difficult, with prices up around 12.6% since 2022 and the share of affordable listings declining to under 30% of inventory.
Inventory gains since 2022—about 220,000 more starter homes for sale—paired with price cooling have helped, but Jones emphasizes that most improvement has come from new construction, particularly in the South. Homeowners with low mortgage rates have largely stayed in place, while many potential buyers have delayed moves to avoid higher rates. “Builders in Texas, Florida, and the Carolinas drove the South's recovery by bringing supply to market just as demand moderated,” she said.
Despite the regional variations, the national trend shows a slowly easing affordability squeeze, with life-event turnover continuing to keep activity afloat even as broad inventory gains remain limited.
The overall picture suggests that while conditions are improving in the aggregate, meaningful relief for first-time buyers will depend on further advances in supply, especially in higher-cost regions, and on the trajectory of mortgage rates and wages.”
