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4 Places Where Starter Homes Became Affordable in 2024

October 15, 2024

4 min Read

Written by Angela Mae

Edited by Rebekah Evans

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These days, the terms “U.S. housing market” and “affordable” almost seem antonymous. According to the FRED, the average sales price of a new home in the third quarter of 2024 was $492,700. While this is slightly down from what it was two years ago, property prices continue to rise across the country.

But things could be turning around in some housing markets. A recent Redfin report found that certain metropolitan areas have actually become less expensive to buy in the past year — at least when it comes to starter homes. This is good news for first-time buyers or those looking to downsize into something smaller and more (financially) manageable.

Here are cities where starter homes have become more affordable and other key changes to the housing market.

Key U.S. Housing Market Statistics

For a home to be considered affordable (by Redfin standards), no more than 30% of the homeowner’s income should be dedicated to their mortgage payment. A median-priced starter home in the U.S. currently costs $250,000 — this means the typical consumer needs to earn $76,995 to afford one.

This is down roughly 4% from last year. It’s also the first time since 2020 that the required income has dropped (largely due to falling mortgage interest rates).

This doesn’t mean starter homes are affordable to everyone, however. Starter home prices have risen by 4.2% in the past 12 months. It’s primarily due to falling interest rates (from 7.07% to 6.08% on average for a 30-year, fixed-rate loan) that the income needed to afford one has dipped.

For the most part, starter homes today are still much less affordable than they were before the COVID-19 pandemic. Here’s how much the median starter home cost in August 2019, 2023 and 2024:

$165,000 in 2019
$240,000 in 2023
$250,000 in 2024

And here’s how much income you would need to afford a median-priced started home in each of these periods:

$39,997 in 2019 (19.1% of typical household income)
$77,343 in 2023 (29.1% of typical household income)
$76,995 in 2024 (27.5% of typical household income)

Currently, starter home prices are 51.1% higher than they were just five years ago. They’re also 163% higher than they were in August 2012. Recent data indicates they’re unlikely to become much more affordable in the coming years.

Metro Areas Where Starter Homes Became Affordable

There is good news, however. As per Redfin data, four metro areas have seen starter homes go from unaffordable to affordable over the past 12 months. Notably, all four are in either Texas or Florida.