First-time homebuyers get some relief, but affordability remains a challenge

Key Points:

• The cost of a typical starter home in the U.S. has increased from $256,000 in 2019 to $344,000, with affordable listings under $350,000 dropping from 55% to 37.6%, making homebuying more challenging, especially for lower-income buyers.
• Mortgage rates and inventory limitations have driven up the income needed to qualify for a starter home from $43,000 to $78,000, with monthly payments rising over 80% since 2019, pushing many first-time buyers to pool resources or relocate to more affordable areas.
• The average age of first-time homebuyers has risen to 40, with a shift toward higher-income households able to qualify at current rates, while lower-income buyers are largely priced out of the market.
• Starter home supply has increased by 220,000 units compared to 2022, mainly due to new construction in the South, where prices have declined 3.5% from their peak, while other regions like the Northeast face rising prices and shrinking affordable inventory.
• Regional disparities are significant: the South and parts of the West show price corrections and increased affordable listings, the Midwest remains most affordable but is seeing price increases, and the Northeast experiences the steepest affordability challenges with prices up 12.6% since 2022.