Starter home affordability is crawling back. These regions are best for first-time buyers - Fox Business

What the report says

Fox Business reported that first-time homebuyers are seeing modest relief in the starter-home market, but affordability remains far weaker than before the pandemic. Citing a Realtor.com analysis, the report said the typical starter home price has climbed from $256,000 in 2019 to $344,000, while listings below $350,000 have dropped from 55% of inventory to 37.6%. The income needed to qualify for a starter home has risen from about $43,000 to $78,000, and monthly payments are more than 80% higher than in 2019.

Realtor.com senior economist Hannah Jones told Fox Business that elevated mortgage rates and tight supply have reshaped the market, leaving lower-income buyers especially squeezed. The report said the average first-time buyer is now 40 years old, and the first-time buyer share, after falling to 30% a year earlier, stood at 35% in May. Jones said buyers are increasingly relying on higher incomes, family support, longer stays with parents or moves to cheaper regions to make ownership possible.

The article also noted signs of improvement from the post-pandemic peak. Realtor.com found 220,000 more starter homes for sale than in 2022, with prices down 4.2% from that period. Much of the added supply has come from new construction, especially in the South, while many current homeowners remain reluctant to sell because they have lower mortgage rates than are available now.

Regional differences are significant. Fox Business reported that the South is the strongest area for improving starter-home access, helped by construction in Texas, Florida and the Carolinas. The West has seen price declines in some markets, including Phoenix and Denver, while the Midwest remains comparatively affordable but is becoming less so. The Northeast was described as the most difficult region, with higher prices and fewer affordable listings than before the pandemic.