Starter Home Prices Are Rising the Most in These Cities
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The sales of starter-homes rose nearly 4 percent year-over-year in June, though the largest inventory climb since October 2019 is mired by record prices up roughly 3 percent since last summer, according to an analysis by real estate firm and brokerage Redfin.
Prices vary based on city and region, as median costs are rising in the Midwest and dropping in the South.
Newsweek reached out to Redfin for comment.
Why It Matters
Housing affordability remains an ongoing concern among countless Americans in a shaky economy as high home prices and increasing mortgage rates are affecting buyers who can't pay exorbitant costs. Meanwhile, sellers don't want to forfeit locked-in interest rates that began rising exponentially during the COVID-19 pandemic.
First-time homebuyers should not expect a financial reprieve anytime soon. Individuals now have to pay more as entry-level home costs are now more than twice as much per month as renting—even as overall inventory is increasing, according to a study released last month by John Burns Research and Consulting (JBREC). It's the first time since 2006 that such drastic disparities in the housing market existed, just prior to the financial collapse.
What To Know
Sales of starter homes rose 3.9 percent year-over-year in June, marking the 10th consecutive month in which home sales rose year-over-year.
The data is derived from dividing U.S. homes into tiers based on the prices of homes sold over a rolling 12-month period, with this particular study focusing on homes whose sale price fell into the fifth to 35th percentile, defined as starter homes. Starter home data includes the 50 most populous U.S. metro areas.
Redfin calls it a sign that first-time homebuyers are jumping into the housing market.
A Redfin managed house sale sign is seen on a property November 1, 2019, in Santa Clara, California.
A Redfin managed house sale sign is seen on a property November 1, 2019, in Santa Clara, California.
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Prices, Sales and Listings by Region
Redfin reports that median sale price of starter homes rose most in Milwaukee (15.3 percent, to $212,918), Detroit (13.6 percent, to $93,140) and Newark, New Jersey, (11.6 percent, to $394,487).
The largest falls were in San Antonio (-5.5 percent, to $218,631), Austin (-3.8 percent, to $326,440), and Dallas (-1.2 percent, to $297,079).
Starter home sales increased most in San Diego (18 percent), Providence, Rhode Island, (17.4 percent), and Sacramento (14.3 percent). They decreased most in Fort Lauderdale, Florida, (-17.5 percent), Miami (-17.4 percent) and San Antonio (-9.6 percent).
The total number of starter homes for sale increased most in Las Vegas (53.6 percent), San Diego (44.1 percent) and Phoenix (43.1 percent). San Antonio was the only metro to experience a fall in active listings (-2.2 percent).
New starter home listings increased most in St. Louis, Missouri, (23.6 percent), Las Vegas (19.5 percent) and Newark (16.4 percent). New listings fell most in San Antonio (-13.8 percent), San Jose, California, (-13.4 percent) and Tampa, Florida, (-10.9 percent).
Starter homes sold fastest in Seattle, with a median of nine days, followed by Montgomery County, Pennsylvania, (15 days), and Indianapolis (17 days). They sold slowest in Fort Lauderdale (99 days), West Palm Beach, Florida, (91 days), and Miami (83 days).
What People Are Saying
Redfin senior economist Sheharyar Bokhari in a statement: "In a market where it's difficult for most Americans to afford a dream home, many are turning toward starter homes. They're typically smaller and more modest, but starter homes remain within reach for some buyers who have been priced out of higher tiers. First-time buyers are especially apt to go for starter homes, as they don't have equity from a previous home sale to help with their payments."
Kathy Scott, a Redfin Premier agent in Phoenix, where active listings of starter homes are up more than 40 percent from a year ago, said in a statement: "First-time buyers definitely have more opportunities now. Not only are there more lower-priced homes available, but there's less demand. The buyers who are out there are no longer in competition with 10 other offers, or all-cash buyers.
"With so many starter homes on the market, buyers have an opportunity to take their time looking for houses that fit their needs. Some are waiting for prices to go down—and they might—but if your plan is to stay in the home for five to 10 years, you will build equity in your home."
What Happens Next?
Efforts are being made by lawmakers to boost housing and provide more affordability in the erratic market.
Bipartisan legislation known as the ROAD to Housing Act of 2025, led by Senator Tim Scott, a South Carolina Republican, and Senator Elizabeth Warren, a Massachusetts Democrat, aims to increase the nation's housing supply, encourage construction, improve affordability, and increase oversight and efficiency of federal regulators and housing programs.
The bill, dubbed the most substantial housing package since the 1990s, unanimously passed the Senate Banking Committee on Tuesday. It was the committee's first such markup hadn't held one on housing in roughly 17 years.
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