Starter Home Inventory Trails 2019 by 300,000 Listings

The U.S. starter home market is currently short approximately 300,000 listings priced under $350,000 when compared to 2019 levels. Concurrently, the income necessary to purchase an entry-level home has increased by more than 80% during the same period, according to a new analysis from Realtor.com released on Monday. This report utilized Realtor.com's active for-sale listings and U.S. Census income data to highlight the uneven recovery in the entry-level housing sector since the pandemic-induced housing boom.

While inventory for homes below $350,000 has seen an increase of 220,000 listings since its lowest point in 2022, the total number of affordable listings nationwide remains significantly below pre-COVID-19 figures, and prices continue to be elevated. Nationally, the median price for a starter home is now $344,000, a substantial rise from $256,000 in June 2019. In 2019, homes priced under $350,000 constituted 55.1% of active listings; this share has now decreased to 37.6%.

Price appreciation has been most pronounced at the lower end of the market. Listings for two- and three-bedroom homes have experienced price increases of 44.5% and 41.0% respectively since 2019. This growth outpaces the 36.9% and 34.0% price gains observed for four-bedroom and five-plus-bedroom homes. The income required to buy a typical starter home has climbed at a faster rate than both prices and wages. The report estimates that a minimum household income of approximately $78,000 is now recommended to purchase an entry-level home, up from $43,000 in 2019, representing an increase exceeding 80%.

Over the same timeframe, median household income has risen by a more modest 28.3%, from roughly $69,000 to $88,100. For homebuilders and real estate professionals, this affordability gap helps explain why many prospective first-time buyers are hesitant to enter the market, even with more sub-$350,000 listings available than in 2022. The analysis suggests that qualification challenges, rather than inventory alone, are the primary constraint in many markets, especially with mortgage rates currently hovering in the mid-6% range. The report also indicates a notable regional divergence in starter home market conditions.