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U.S. starter home affordability worsens as $78,000 income is needed

Realtor.com data shows the typical starter home costs $344,000, and only 37.6% of active listings are priced below $350,000 versus 55.1% in 2019.

Reported · Written up by our desk · Residential

U.S. entry-level housing remains constrained by both a shortage of affordable listings and worsening affordability, according to a new Realtor.com analysis released Monday.

The report estimates the minimum household income required to buy today’s typical starter home at about $78,000, up from about $43,000 in 2019, a gain of more than 80%. It also finds the income needed has risen far faster than wage growth, widening the gap that can keep first-time buyers on the sidelines even as sub-$350,000 inventory improves.

Realtor.com says the starter home market is still short by roughly 300,000 listings priced under $350,000 compared with 2019. The typical starter home now costs $344,000, up from $256,000 in June 2019, and the share of active listings under $350,000 has fallen to 37.6% from 55.1% in 2019.

While inventory of homes below $350,000 has increased by 220,000 listings since a 2022 trough, Realtor.com notes affordability deterioration is uneven by region, with more inventory in the South and West but sharper declines in the Northeast and Midwest. The analysis also points to qualification limits as mortgage rates hover in the mid-6% range.

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