The Starter Home Market Is Down 300,000 Homes From 2019

It Now Takes a $78,000 Income to Buy a Starter Home, Up From $43,000 in 2019, According to a New Report from Realtor.com^®

AUSTIN, Texas, July 20, 2026 /PRNewswire/ -- The national starter home shortage that peaked in 2022 is beginning to ease, but a new Realtor.com^® report finds the recovery is anything but even. Nationally, there are roughly 300,000 fewer homes priced under $350,000 on the market today than in June 2019, and the typical starter home now costs $344,000, up from $256,000 seven years ago.

Entry-level buyers in the South and West are seeing more affordable listings and softening prices, while buyers in the Northeast face a market that keeps getting tighter. Starter home prices there have climbed 12.6% since 2022 alone and now sit nearly 50% above pre-pandemic levels, according to the report released today.

"The starter home story looks completely different depending on where you're standing," said Hannah Jones, senior economist at Realtor.com^®. "In the South and West, builders spent the last few years chasing demand at the entry level, and buyers there are actually seeing more choices and better prices than they had two years ago. In the Northeast, that construction response never happened — prices kept climbing even as the rest of the housing market cooled. That divergence is exactly why the recovery feels so different depending on where you live."

The Starter Home Squeeze, By the Numbers

In June 2019, 55.1% of active listings nationally were priced under $350,000. Today that figure has fallen to 37.6%. The squeeze has hit the smallest homes hardest: two- and three-bedroom listings have risen 44.5% and 41.0% in price since 2019, outpacing 36.9% and 34.0% gains for four- and five-plus-bedroom homes.

Affordability has eroded even faster than prices alone suggest. Today's typical starter home requires a recommended minimum household income of roughly $78,000, up from just $43,000 in 2019 — an increase of more than 80%. Median household income, by comparison, has risen 28.3% over the same period, from about $69,000 to $88,100.

There are, however, signs of relief. Inventory priced under $350,000 has grown by 220,000 homes since the 2022 trough, and the affordable share of listings is up 1.6 percentage points from a year ago.

"Higher rates have kept homeowners stuck in place, but we're finally seeing cracks in the lock-in effect. Every year, more owners hit a life event — a new job, a divorce, a retirement — that forces a move regardless of their mortgage rate, and that's slowly working supply back into the market," said Jones.

Four Regions, Four Different Markets

The regional divergence is the starkest finding in the report. Starter home price thresholds have fallen since 2022 in the South and West, even as they continue to climb in the Midwest and Northeast.

The South has turned the clearest corner of any region: a construction boom in Texas, Florida, and the Carolinas has added nearly 170,000 affordable listings since the 2022 trough, and starter home prices there have pulled back 3.5% from their peak. The West has seen the largest price pullback of any region, down 7.3% since 2022, led by relief in Denver, Phoenix, and Colorado Springs — though coastal California metros like Los Angeles and San Francisco have seen far less improvement.

The Midwest remains the most affordable region in absolute dollar terms, but its advantage is eroding: starter home prices there are up 10.0% since 2022 alone and 37.5% since 2019, the steepest percentage increase of any region over that longer period. The Northeast presents the most difficult picture nationally. Just 29.7% of Northeast listings are priced under $350,000 today, down from roughly 48% before the pandemic, and the region's starter home threshold has climbed to $444,000.

"The Northeast is the toughest market in the country right now for a first-time buyer. Limited land, restrictive zoning, and buyers with real financial firepower have combined to push the entry price beyond what most middle-income households can even qualify for. Unlike the South and West, there's been no pullback there — the trend is still moving in the wrong direction," said Jones.

More Listings, Fewer Sales
Despite the inventory gains, affordable transactions have not followed. Home sales under $350,000 fell roughly 10% in April 2026 compared with a year earlier and are down 7.2% year-to-date, a steeper decline than other price tiers. The South, despite leading the country in inventory recovery, saw affordable sales fall 7.3% in April; the Midwest posted the steepest affordable sales decline of any region, down 13.5% year-over-year in April; the Northeast is the only region where sales fell across every price tier; and the West was the outlier, with sub-$350,000 sales essentially flat for the year.

"More listings on the market should mean more sales, but that's not quite what we're seeing. Buyers can find a home priced under $350,000 in more places than they could two years ago — the problem now is qualifying for the mortgage. Rates are still in the mid-6% range, and the income it takes to buy a starter home has climbed more than 80% since 2019, so a lot of would-be buyers are simply sitting this one out," said Jones.

Where Do We Go From Here
The squeeze has reshaped who is buying a first home and when. The average first-time homebuyer is now 40 years old, though the first-time buyer share has recently climbed to 35% in May, up from 30% a year earlier. The U.S. still faces a housing shortage of roughly 4 million homes as the underlying constraint on any broad, near-term recovery.

The starter home market over the next five years looks like a slow, uneven normalization rather than a dramatic reset, as the lock-in effect gradually fades, inventory continues to build, and household formation patterns shift. Younger, lower-income, first-time buyers without existing equity are likely to remain the most squeezed.

Methodology

Data in this analysis draws on the Realtor.com database of active for-sale listings and incorporates median household income data from the U.S. Census Bureau's Current Population Survey. Starter home price thresholds are defined as listings priced below $350,000 nationally (absolute thresholds) or below 80% of the area's median list price (relative threshold). Single-family listing data by bedroom count reflects active listings in each quarter. All figures are national unless otherwise noted.

About Realtor.com^®

For over 30 years, Realtor.com^® has connected buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 real estate site REALTOR® agents recommend, Realtor.com^® delivers consumer connections and a robust suite of marketing tools to support business growth. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media Contact: Mallory Micetich, [email protected]

SOURCE Realtor.com