04/16/2025
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Starter home prices have skyrocketed over the past seven years—rising from $156,626 in 2017 to $292,950 in 2024. These entry-level homes, often referred to as starter homes, are typically smaller and more affordable properties that serve as a first purchase for new homebuyers. But affordability has become a growing concern.
Rising mortgage rates—dipping below 4% in 2019 and nearing 7% more recently—have made these homes even less accessible to first-time buyers.
“Though home price growth has contributed significantly to declining affordability, mortgage rate growth has exacerbated the issue,” says Realtor.com senior economic research analyst Hannah Jones.
“While starter home prices climbed 53.7% over the last five years, payments more than doubled due to mortgage rates increasing from roughly 4% to almost 7%.
“Falling mortgage rates are crucial to improved housing affordability,” she adds.
💰 The income needed in each state to afford a starter home: https://rltor.cm/rsvca5
