Starter home affordability has improved for eight straight months, but buyers still face tight conditions in many markets. Americans now need an estimated $70,693 in annual income to afford a typical U.S. starter home (homes in the 5th to 35th percentile of sale prices), down 1.5% from a year ago. That marks continued easing in entry level affordability since November 2025, though the pace of improvement has slowed as mortgage rates climbed through 2026.
Why affordability is getting a bit better
- Prices for starter homes are rising more slowly than wages. The median starter home price rose just 1.2% year over year in June, while household earnings have increased faster, widening the gap between typical income and the income needed to buy a starter home.
- The share of income required to cover monthly mortgage payments on a starter home has fallen to 24.2% from 25.6% a year ago below the common 30% affordability threshold.
- More listings are affordable: 71.4% of U.S. home listings were affordable to someone earning the median income in June, up from 64.7% a year earlier.
Still, affordability is strained Despite these improvements, starter homes remain near record price levels and mortgage rates are elevated around 7% and recently at a one year high keeping monthly payments high. First time buyers, who are most likely to seek starter homes, often have less savings and are more sensitive to higher rates and renovation costs, so move in ready properties attract intense demand while fixer uppers are less appealing.
Big picture comparisons
- The typical U.S. household earns about $87,599 annually, roughly $17,000 more than needed to buy the median priced starter home. A year ago that surplus was about $12,500, so the cushion has grown.
- For the overall housing market, affordability has barely improved: Americans need $109,796 to buy the median home for sale, down only 0.5% from last year’s record high. The broader market is being pushed up by strong price gains in luxury segments and expensive metro areas.
Regional differences matter
Affordability varies widely across metro areas. Nearly half of the largest metros (22 areas including Austin, Dallas, Houston, Milwaukee, Cleveland and Detroit) had all starter home listings affordable to median earners. In the Midwest, cities such as Detroit and Pittsburgh starter homes can require as little as 14 to 15% of local median income. By contrast, starter homes are essentially out of reach in many Californian markets. In San Diego, Los Angeles and San Francisco, virtually no starter home listings are affordable to a typical local household; in Los Angeles a starter home would consume about 51% of median income.
Entry level housing is becoming modestly more affordable in much of the country thanks to slower starter home price growth and rising wages, but high mortgage rates and stark regional disparities mean first time buyers still face meaningful constraints especially in costly coastal metros.
