Starter home inventory trails 2019 by 300,000 listings, per new data

The U.S. starter home market remains short roughly 300,000 listings under $350,000 compared to 2019, and the income needed to buy an entry-level home has jumped more than 80% over that period, according to a new report from Realtor.com.

The analysis, released Monday and based on Realtor.com’s active for-sale listings and U.S. Census income data, underscores how uneven the entry-level recovery has been since the pandemic housing boom. While inventory of homes priced below $350,000 has risen by 220,000 listings since a 2022 trough, the total number of affordable listings nationwide is still far below pre-COVID levels and prices remain elevated.

Affordability gap widens

Nationally, the typical starter home now costs $344,000, up from $256,000 in June 2019. In 2019, 55.1% of active listings were priced under $350,000; that share has fallen to 37.6% today, Realtor.com said.

Price growth has been strongest at the lower end of the market. Two- and three-bedroom listings have risen 44.5% and 41.0% in price since 2019, outpacing gains of 36.9% and 34.0% for four-bedroom and five-plus-bedroom homes.

The income required to purchase a typical starter home has climbed faster than both prices and wages. The report estimates a recommended minimum household income of about $78,000 to buy today’s entry-level home, up from $43,000 in 2019 — an increase of more than 80%. Over the same period, median household income has risen just 28.3%, from roughly $69,000 to $88,100.

For homebuilders and realtors, that gap partially explains why many first-time buyers remain on the sidelines despite more sub-$350,000 listings than in 2022. Qualification, not inventory alone, is the binding constraint in many markets as mortgage rates hover in the mid-6% range.

Regional split in starter home conditions

The report highlights a sharp regional divergence in how the starter home recovery is playing out. Since 2022, price thresholds for entry-level homes have fallen in the South and West but continued to climb in the Midwest and Northeast. 

In the South, a construction surge in Texas, Florida and the Carolinas has added nearly 170,000 affordable listings since 2022, helping pull starter home prices back 3.5% from their peak. The West has seen the largest pullback, with entry-level prices down 7.3% since 2022, led by markets such as Denver, Phoenix and Colorado Springs. Coastal California metros, including Los Angeles and San Francisco, have seen less relief.

The Midwest remains the most affordable region in absolute terms, but prices there are rising fastest over the longer run. Starter home prices have climbed 10% since 2022 and 37.5% since 2019, the steepest percentage increase of any region over that seven-year period.

The Northeast stands out as the most challenging market for first-time buyers. Only 29.7% of listings there are priced under $350,000 today, down from about 48% before the pandemic. The region’s starter home threshold has climbed to $444,000, nearly 50% above pre-pandemic levels. Realtor.com attributes the strain to limited land, restrictive zoning and higher-income buyers competing for a small pool of entry-level stock.

For builders, the regional split reinforces where entry-level construction has and hasn’t materialized. For policymakers and local officials, the data underscores the role of land-use rules and supply constraints in shaping first-time buyer access.

More listings, but fewer affordable sales

Despite modest gains in inventory, sales of affordable homes have not kept pace. Transactions under $350,000 fell about 10% in April 2026 from a year earlier and are down 7.2% year to date, a steeper decline than in higher price tiers, according to the report.

By region:

• The South, which leads the country in sub-$350,000 inventory growth, saw affordable sales fall 7.3% year over year in April.
• The Midwest posted the largest decline in affordable sales, down 13.5% year over year in April.
• The Northeast was the only region where sales fell across every price tier.
• The West was the outlier, with sub-$350,000 sales essentially flat so far this year.

Realtor.com’s senior economist Hannah Jones said many buyers can now find homes under $350,000 in more markets than two years ago, but still struggle to qualify for financing as rates and required incomes remain elevated.

For loan officers and brokers, that pattern suggests opportunity in first-time buyer education and down payment assistance programs, but also ongoing volume pressure in the sub-$350,000 segment unless rates move lower or incomes catch up.

First-time buyer profile shifts

The squeeze in starter homes has also changed who is buying and when. The average first-time homebuyer is now 40 years old, according to the report. However, the first-time buyer share of the market has edged higher, reaching 35% in May, up from 30% a year earlier.

Realtor.com estimates the U.S. still faces an overall housing shortage of about 4 million homes, a structural deficit that continues to limit any broad-based affordability recovery.

Looking ahead, the company expects the starter home segment to move toward a “slow, uneven normalization” rather than a sharp reset. As the rate lock-in effect gradually fades and more owners are compelled to move due to life events, inventory should continue to build. But younger, lower-income buyers without existing equity are likely to remain the most constrained.

For real estate professionals, the data points to a market where regional strategy matters. In the South and parts of the West, new construction and moderating prices may support more first-time activity, while in the Northeast and much of the Midwest, policy interventions, creative financing structures and targeted affordability programs are likely to be critical to restoring entry-level access.

Methodology

The analysis draws on Realtor.com’s database of active for-sale listings and median household income data from the U.S. Census Bureau’s Current Population Survey. Nationally, starter homes are defined as listings priced under $350,000. 

At a local level, the report also references a relative affordability threshold of homes priced below 80% of an area’s median list price. Single-family listing data by bedroom count is based on active listings by quarter. All figures are national unless otherwise noted, according to the company announcement.