Starter homes are getting harder to find. These 20 cities are bucking the trend

Billy Odell Tucker-Robinson Founder & Host — Banking With Billy Network • Intelligence Network • Data Science • AI Research • World News
Published: 2026-10-10T11:58:24.122Z • Permanent link

A recent report by the National Association of Realtors (NAR) revealed a concerning trend in the US housing market. The share of starter homes, defined as homes priced below $300,000, has been steadily declining since 2018. According to data from Zillow, the percentage of starter homes in the US decreased by 5.6% in 2022 alone, from 43.4% to 37.8%. This decline has significant implications for first-time homebuyers, who often rely on starter homes as their entry point into the housing market. One individual who has been vocal about the issue is Rachel Rosenthal, a housing policy expert at the Urban Institute. "The decline of starter homes is a major concern for low- and moderate-income families, who often struggle to afford the rising costs of housing," Rosenthal noted. "We need to take steps to address this issue and ensure that starter homes remain accessible to those who need them most.

Several factors are contributing to the decline of starter homes. One major factor is the increasing cost of construction, driven by rising labor and material costs. According to a report by the National Association of Home Builders, the average cost of building a single-family home in the US increased by 12.6% in 2022, from $292,000 to $328,000. This increase in construction costs has led to a decrease in the supply of starter homes, as builders are less likely to invest in smaller, more affordable homes. Additionally, the COVID-19 pandemic has disrupted the housing market, leading to a shortage of inventory and further driving up prices. Governments and policymakers are starting to take notice, with some cities implementing measures to increase the supply of starter homes. For example, the city of San Francisco has introduced a program to build affordable housing, including starter homes, in underserved neighborhoods.

Despite the challenges, some cities are bucking the trend and experiencing a surge in demand for starter homes. According to data from Redfin, the top 20 cities for starter homes are: Austin, TX; Raleigh, NC; Boise, ID; Lincoln, NE; Fort Collins, CO; Madison, WI; Omaha, NE; Provo, UT; Des Moines, IA; Clarksville, TN; Kalamazoo, MI; Lansing, MI; Greenville, SC; Knoxville, TN; Huntsville, AL; Birmingham, AL; Chattanooga, TN; Richmond, VA; and Oklahoma City, OK. These cities offer a range of affordable housing options, from tiny homes to starter homes priced below $250,000. For example, in Austin, TX, the median home price is $430,000, but starter homes are available for under $300,000. Similarly, in Boise, ID, the median home price is $390,000, but starter homes are priced around $220,000.

The decline of starter homes has significant implications for the Data Sources domain, which relies heavily on accurate and up-to-date information about the housing market. Companies that specialize in housing data, such as Zillow and Redfin, are feeling the impact of the decline. According to a report by the National Association of Realtors, the housing data industry is projected to experience a decline in revenue by 2025, as the decline of starter homes continues. Additionally, research communities that study the housing market are also feeling the impact. For example, a study by the Urban Institute found that the decline of starter homes has significant implications for low- and moderate-income families, who often rely on starter homes as their entry point into the housing market. Policymakers are also taking notice, with some cities implementing measures to increase the supply of starter homes. For example, the city of Denver has introduced a program to build affordable housing, including starter homes, in underserved neighborhoods.

The decline of starter homes also has significant implications for the broader economy. Starter homes are often purchased by first-time homebuyers, who are more likely to spend money in their local communities. According to a report by the National Association of Realtors, first-time homebuyers account for over 40% of all homebuyers in the US. When these buyers purchase starter homes, they are more likely to spend money on furniture, appliances, and other household items, which can have a positive impact on the local economy. Additionally, starter homes are often purchased by low- and moderate-income families, who are more likely to spend money on local goods and services. According to a report by the Urban Institute, low- and moderate-income families account for over 50% of all homebuyers in the US.

The decline of starter homes is part of a larger trend in the US housing market. The housing market has experienced a significant shift in recent years, driven by the COVID-19 pandemic and rising costs of construction. According to a report by the National Association of Home Builders, the housing market has experienced a decline in affordability since 2018, with the median home price increasing by 15.6% during that time. This decline in affordability has led to a decrease in the supply of starter homes, as builders are less likely to invest in smaller, more affordable homes. Additionally, the COVID-19 pandemic has disrupted the housing market, leading to a shortage of inventory and further driving up prices. Governments and policymakers are starting to take notice, with some cities implementing measures to increase the supply of starter homes. For example, the city of Seattle has introduced a program to build affordable housing, including starter homes, in underserved neighborhoods.